26th July 2025
Both the UK, USA and western countries are undergoing major overhauls of their foreign aid programs, driven by shifting political priorities, budget constraints, and a growing emphasis on national interest. The consequences will be huge.
United States: Foreign Aid Retrenchment
Key Changes
USAID Shut Down: As of July 1, 2025, the U.S. Agency for International Development (USAID) has ceased operations. Its programs are now run by the State Department, aligning aid with the Trump administration's "America First" agenda.
$7.9 Billion Cut: The Rescissions Act of 2025 slashes nearly $8 billion from foreign aid, including economic assistance, disaster relief, and health programs.
Focus Shift: Aid will now prioritize:
Trade and investment over charity
Countries that "help themselves"
Programs benefiting U.S. companies and strategic interests
Consequences
Global Health Crisis: Cuts to HIV/AIDS programs (PEPFAR), maternal health, and emergency relief have led to halted trials and reduced access to life-saving treatments.
Humanitarian Fallout: Aid groups report closures of clinics, schools, and refugee support programs, especially in Africa and conflict zones.
Criticism: Former Presidents Obama and Bush have condemned the dismantling of USAID as a "tragedy".
United Kingdom: Strategic Cuts and Realignment
Budget Reductions
Aid Budget Slashed: From 0.5% to 0.3% of Gross National Income by 2027 — a reduction of about £6 billion.
2025-26 Cuts:
Health: Down 46% (£975m → £527m)
Education & Gender Equality: Down 42%, with girls' education nearly halved
Africa: Bilateral aid cut by 12%
Impacted Areas
Women & Girls: Cuts to sexual and reproductive health programs, including the WISH initiative in Africa
Humanitarian Crises: Reduced funding for South Sudan, Ethiopia, Somalia, and surprisingly, Gaza and Sudan8
Asylum Costs: A significant portion of UK aid is now spent domestically on housing asylum seekers, reducing overseas aid to its lowest level in 50 years
Strategic Pivot
Multilateral Focus: Increased funding to global institutions like:
World Bank's IDA: £1.98 billion over 3 years
Gavi Vaccine Alliance: £1.25 billion pledged
"Modernized" Approach: UK aims to be a partner and investor, not just a donor — sharing expertise in science, finance, and climate resilience.
European Countries: Foreign Aid Changes in 2025
Across Europe, foreign aid budgets are undergoing significant restructuring, with many countries cutting back due to economic pressures, rising defence spending, and shifting geopolitical priorities.
Countries Cutting Aid
Germany
ODA Cuts: €19.8 billion reduction across aid-related ministries
BMZ Budget: Down €937 million; Foreign Office cut by €836 million
Focus Shift: More emphasis on defense and domestic priorities
France
Aid Budget Cut: €1.3 billion (23% drop from 2024)
Funding Mechanisms Scrapped: Ends Financial Transaction Tax and Airplane Solidarity Levy
Impact: Reduced support for Global Fund and Green Climate Fund
Netherlands
ODA Reductions: €350 million cut in 2025, rising to €2.5 billion by 2027
Despite Previous Increases: Reverses earlier growth in development spending
Sweden
ODA Set at: SEK56 billion (0.88% of GNI), below 1% target
Focus Areas: Climate, poverty reduction, SRHR, Agenda 2030
Finland & 🇨🇭 Switzerland
Defence vs Aid: Both countries are redirecting funds from climate and development aid to military budgets
Countries Increasing or Maintaining Aid
🇪🇸 Spain
Goal: Reach 0.7% of GNI by 2030 (currently 0.3%)
2022 ODA: $4.3 billion, 12th-largest OECD donor
2025 Budget: Approval delayed due to Catalonia elections
Norway
Stable ODA: NOK52.9 billion (0.92% of GNI)
Boosts:
NOK300 million for humanitarian aid
NOK380 million for climate initiatives
Major increase for Ukraine support via Nansen Program
EU-Wide Developments
Gaza Crisis Response: France, Germany, UK, and Italy coordinating emergency aid airdrops
EU-Israel Aid Deal Scrutiny: Countries demanding verification mechanisms for humanitarian aid delivery
Sevilla Commitment: Pledges to reverse aid decline and mobilize innovative financing for SDGs.
Humanitarian Fallout
Health & Survival
USAID cuts could lead to 14 million deaths by 2030, including 4.5 million children under five, especially in Sub-Saharan Africa and South Asia.
HIV treatment shortages in countries like Haiti, where over 150,000 people are affected.
UK aid cuts threaten programs like the Ending Preventable Deaths initiative, maternal health, and pandemic preparedness.
Food & Nutrition
Food aid deliveries are declining in conflict zones such as Sudan, Yemen, and Gaza.
Nutrition programs for pregnant women and children have been halted in multiple countries.
Education & Gender Equality
Girls' education funding halved in the UK, affecting 170,000 children in the Democratic Republic of Congo alone.
Cuts to sexual and reproductive health programs disproportionately affect women and girls, especially in post-conflict regions3.
Economic & Social Development
Countries like Ethiopia, Jordan, Afghanistan, and DRC are projected to lose hundreds of millions in aid, undermining basic services and economic growth.
Lesotho, Somalia, and Micronesia may lose over 5% of their Gross National Income due to aid cuts.
Aid-dependent economies face sharp declines in disposable income, worsening poverty and instability.
Strategic Shifts & Gaps
Aid is being redirected toward multilateral institutions like the World Bank and Gavi, which may not fill the gaps left by reduced bilateral aid5.
In-donor refugee costs are absorbing large portions of aid budgets, leaving less for overseas development.
Civil society organizations in recipient countries are struggling to maintain services amid funding shortfalls.