The EU's rising debt burden could weigh heavily on future budgets, with borrowing potentially reaching €1 trillion by 2027. (Reuters Pic)

BRUSSELS: Ballooning EU debt could blow a hole in the bloc's next seven-year budget if governments fail to agree on new sources of revenue, auditors warned Thursday.

European Union capitals are locked in the usual battle between so-called "frugal" nations including Germany and higher-spending countries like France.

European leaders will discuss the 2028-2034 budget next week after Ireland, which holds the rotating EU presidency, presents the latest proposal Saturday that so-called "frugals" say must contain more cuts.

The EU executive proposed a budget worth around two-trillion-euros last year, including plans to raise money from new taxes on large companies, environmental taxation and levies on tobacco.