The charity Cancer Research UK said it was a “huge burden”.
The figures, published in the Lancet Oncology, included the cost of drugs and health care as well as earnings lost through sickness or families providing care.
Lung cancer was the most costly form of the disease.
The team from the University of Oxford and King’s College London analysed data from each of the 27 nations in the EU in 2009.
The showed the total cost was 126bn euro and of that 51bn (£43bn) euro was down to healthcare costs including doctors’ time and drug costs.
Lost productivity, because of work missed through sickness or dying young, cost 52bn (£44bn) euro while the cost to families of providing care was put at 23bn (£19.5bn) euro.
Overall, richer countries, such as Germany and Luxembourg, spent more on cancer treatment per person than eastern European countries such as Bulgaria and Lithuania.
Lung cancer accounted for more than a tenth of all cancer costs in Europe. The deadly cancer tends to affect people at an earlier age than other cancers so the lost productivity through early deaths is a major factor.
However, the overall economic burden is behind the costs of dementia and cardiovascular disease.
An EU-wide study, by the same research group, showed cardiovascular diseases, including high blood pressure and stroke, cost 169bn euro (£144bn) a year while dementia cost 189bn euro (£169bn) in just 15 countries in Western Europe.
Dementia has very high costs associated with long-term care while cardiovascular diseases include such a wide range of conditions it affects many more people than cancer.
One of the researchers, Dr Ramon Luengo-Fernandez, from the Health Economics Research Centre at the University of Oxford, said: “By estimating the economic burden of several diseases it will be possible to help allocate public research funding towards the diseases with the highest burden and highest expected returns for that investment.”
Prof Richard Sullivan, from King’s College London, said: “It is vital that decision-makers across Europe use this information to identify and prioritise key areas.
“More effective targeting of investment may prevent health care systems from reaching breaking point – a real danger given the increasing burden of cancer – and in some countries better allocation of funding could even improve survival rates.”
Sara Osborne, head of policy at Cancer Research UK, said: “The financial impact that cancer has on the economy across Europe due to people dying prematurely from the disease and time off work remains a huge burden.
“This study reinforces why research is vital to improve our understanding of the causes of cancer – so that we lessen the impact of the disease and develop better ways to prevent and treat the illness.
“We also need to understand why the UK’s cancer mortality rates remain higher than many EU countries despite a similar spend on cancer care.