Brussels Warns Portugal to Accelerate Spending of EU Recovery Billions

The European recovery billions are flowing, yet the projects they are meant to finance are still moving at a far more leisurely pace. Brussels has already wired €367 B to national treasuries, but the European Commission is warning that unless capitals – Lisbon included – speed up the final stretch, a sizeable share of the money could remain idle when the curtain falls on NextGenerationEU in 2026.

Brussels counts the cash, but the clock is ticking

The Commission’s latest progress report puts cumulative disbursements from the Mecanismo de Recuperação e Resiliência at 56 % of the facility’s €650 B envelope. That may look reassuring on paper, yet officials stress that only 44 % of the pot has actually been absorbed in concrete projects. The remainder sits in ministries’ accounts waiting for contractors, permits or political green lights.Under the rules, every milestone and target must be ticked off by 31 August 2026; all invoices must reach Brussels by 31 December 2026. The executive’s tone is therefore sharper than a year ago: it praises the scheme for lifting public investment to 3.8 % of EU GDP this year but warns that the “hard part”—installation of solar parks, metro tunnels, housing units—starts now.Commission Vice-President Valdis Dombrovskis did not mince words: “Urgency is no longer a slogan; it is the difference between getting the cheque or sending it back.”

How Portugal stacks up in the Union’s league table

Portugal sits in what Brussels diplomatically calls the “blue group” of mid-pack performers. Roughly 9.2 B of the country’s €22.2 B allocation has reached final beneficiaries, translating into an execution rate of 41 %. That is well ahead of the EU average of 32 %, yet Lisbon still has to deliver more than half of its 410 milestones in less than two years.Neighbouring Spain and Poland are in the orange zone, with less than a fifth of goals achieved, while Sweden, Hungary, Bulgaria and Romania have slipped into the red alert category. The comparative data matters for Portugal: a congested Brussels approval pipeline could delay later payment requests if laggards rush in simultaneously.Economists at the University of Minho note that €1 invested through the PRR adds €1.3 to national GDP once multiplier effects ripple through. The risk, they argue, is not merely losing grants but forfeiting that growth boost when the economy is already slowing.

The Portuguese bottlenecks: housing, metros and forests

Three areas explain much of Portugal’s drag. First, affordable housing: the Court of Auditors says 7 425 promised units remain on the drawing board, jeopardising almost €1 B earmarked for social accommodation. A flagship project in Coimbra’s Quinta das Bicas, for instance, has yet to break ground because of planning appeals.Second, the Lisbon and Porto metro extensions have been slowed by “acute shortages of specialised labour” and disputes over environmental impact statements. The inflation-driven spike in construction costs adds another layer of uncertainty, with contractors demanding price revisions that public bodies are reluctant to grant.Third, Portugal’s forest resilience programme—once showcased in Brussels as a green transition gem—now counts four investments in critical condition after tender procedures failed twice. Officials fear that any further slip could collide with the wildfire season, when heavy machinery is barred from sensitive zones.

Lisbon’s response and the new Brussels toolbox

Finance Minister Joaquim Miranda Sarmento insists the government is “fully committed to 100 % execution” and points out that Portugal has already submitted its seventh payment request. To keep momentum, Lisbon is front-loading audits, hiring extra project managers and promising “faster visa channels” for foreign engineers—an attempt to plug the labour gap.Brussels, for its part, has loosened several screws. Revised guidelines published on 4 June 2025 allow governments to swap unviable projects for quicker ones, shift up to 5 % of cohesion funds into the PRR, and request additional loans if grants alone cannot close financing gaps. The Commission has also pledged to cut 25 % of administrative costs in financial-services regulation, hoping to free up bandwidth in ministries that supervise both banks and EU funds.Portugal is expected to file its updated plan before 31 December 2025, concentrating resources on measures that can be delivered within the window.

Why faster delivery matters for families and firms

Beyond the Brussels scoreboard, the stakes are tangible. Homebuyers face the tightest housing market in two decades; delayed PRR projects mean fewer new units and continued upward pressure on rents. Commuters in Greater Lisbon still squeeze into overcrowded carriages because metro upgrades lag behind schedule. And for businesses, every month of uncertainty over grant payments compounds financing costs just as the European Central Bank’s high-rate cycle bites into margins.In the long run, Portugal’s demographic challenge makes the productivity boost promised by the PRR all the more critical. Dragging the process risks under-delivering not just bricks and mortar but the country’s broader ambition to converge with the euro-area income average.With €335 B still on Brussels’ balance sheet and nineteen months on the clock, the next year will reveal whether the unprecedented recovery plan cements a greener, more digital Portugal—or becomes another line in the ledger of funds that could have been.