As Russia escalates its war, the EU realises its support for Ukraine won't be enough

Russia’s escalation has changed Ukraine’s European support from a planned package into an open-ended financial and military challenge. Earlier programmes were designed around the expectation that the war might end this year. That assumption is now badly weakened. Ukraine needs continued help because bombardment is damaging its economy, infrastructure and air defences.

The €90 billion EU loan illustrates the problem. It was agreed to cover two-thirds of Ukraine’s needs in 2026 and 2027, but the worsening war is creating larger requirements. Ukraine’s finance minister has warned that 2027 will be the most difficult budget since the full-scale invasion began. The country may need $78 billion more from international donors.

The EU has not formally reopened the support debate, partly because governments are negotiating the next EU budget. Yet diplomats expect leaders to confront the issue. Rising debt, weak growth, far-right opposition and the absence of US aid make longer-term European support harder to arrange.

The €90 billion support loan is a large EU financing programme for Ukraine. European leaders agreed it last year to cover about two-thirds of the country’s expected needs across 2026 and 2027. It was intended to give Ukraine predictable support while it continued fighting Russia and managing its damaged economy.

The programme is not tied in the article to one single expense. Instead, it is described as covering Ukraine’s broader needs. The European Commission plans to provide €45 billion next year under the loan. Disbursements are expected to speed up, but they depend on Ukraine carrying out internal reforms.

The loan’s basic planning assumption has become a major weakness. It was designed on the premise that the war would end sometime this year. Russia’s escalation makes that outcome unlikely, raising doubts about whether the programme will be large or durable enough for 2027.

Ukraine’s potential 2027 funding shortfall could reach $78 billion, equivalent to €70 billion. Finance Minister Sergii Marchenko described the 2027 budget as the most complicated since the full-scale invasion and urged international donors to cover the gap. The figure shows how quickly wartime needs may outgrow existing assistance.

The gap reflects the difference between what Ukraine expects to need and the money already planned. The European Commission intends to provide €45 billion next year through the EU’s support loan. Marchenko’s estimate is therefore substantially higher, although the Commission has not accepted his headline calculation.

Brussels says the exact amount is still being assessed. Economy Commissioner Valdis Dombrovskis called the situation more challenging and confirmed that a sizeable gap exists. If the war continues and destruction worsens, EU leaders and other donors will face pressure to provide more funding beyond current programmes.

Airstrikes and infrastructure damage weaken both Ukraine’s economy and its government finances. Attacks on railways, bridges, power stations, data centres, warehouses, medical centres and schools disrupt transport, electricity, services and business activity. Rebuilding also creates extra costs while the state must continue paying for essential needs and defence.

The article describes drones disrupting ordinary activity, forcing businesses to close, raising material costs and reducing profits. Russia’s Black Sea blockade adds another direct blow. Ukrainian farmers cannot sell tonnes of grain to global customers, so the state loses an important source of revenue. Damage to power systems can also plunge cities into darkness, as happened in Kyiv.

These effects reinforce each other. Lower business profits and blocked exports reduce government income, while destroyed infrastructure increases spending needs. Civilian casualties and damage to public facilities deepen the emergency. As the war continues, Ukraine becomes more dependent on outside donors, while those donors face a larger and less predictable bill.

Immobilised Russian assets are Russian-owned funds that have been frozen or blocked from being moved or used normally. The article says Belgium is their main custodian. Supporters argue that these assets could help finance Ukraine, especially because the existing €90 billion loan may not be enough.

The mechanism would use the assets as a possible financial foundation for further support. However, the article does not set out a final legal model. It says the proposal is an “uncharted avenue” and recalls that an asset-backed plan collapsed at a dramatic summit in December. That failure led to the current loan becoming Plan B.

The issue remains politically difficult. Belgium has pushed back, while France and Italy remain reluctant. Some EU countries want the debate revived, but diplomats say there is still nothing new or substantial on the table. Any move would therefore need political agreement and a credible answer to the legal concerns surrounding the assets.

The EU has several possible ways to fill Ukraine’s funding gap. It can reconsider immobilised Russian assets, borrow jointly as it did for the €90 billion loan, ask member states to provide more bilaterally, or seek larger contributions from the UK, Canada and Japan. None offers an easy or immediate solution.

More joint EU debt has become politically unattractive because borrowing costs are spiralling. Bilateral contributions are simpler, but they could place disproportionate pressure on Germany, the Netherlands and the Nordic countries. Using Russian assets could provide another route, yet Belgium has resisted and France and Italy remain cautious after an earlier proposal collapsed.

The EU is therefore asking other allies to step up while it assesses alternatives. This may spread the burden, but it also depends on partners agreeing to provide more. Meanwhile, member states are already fighting over the next EU budget, and domestic debt, stagnant growth and far-right opposition make additional commitments harder.

When a government spends more than it collects, it has a budget deficit. It can cover that gap by borrowing, using available funds or receiving support from other governments and institutions. Borrowing lets essential spending continue, but it creates future repayment obligations and may become harder if lenders doubt the government’s finances.

War makes the problem sharper. Airstrikes disrupt businesses, raise material costs and reduce profits. The Black Sea blockade prevents farmers from selling grain, depriving the state of revenue. At the same time, Ukraine must pay for public services, repairs and wartime needs. The result is a widening gap between income and spending.

A prolonged war can make the gap difficult to borrow away because needs keep rising while revenues remain weak. Lenders may demand higher costs, and supporters may face their own debt and political limits. Ukraine’s request for $78 billion in 2027 funding shows why outside assistance remains central to keeping its budget functioning.