The UK’s prime minister Keir Starmer announced last week the UK would fund increased spending on defence by cutting its aid budget from roughly 0.5 per cent of gross national income to 0.3 per cent. His development minister, Anneliese Dodds, resigned on principle over the extent of the cuts on Friday. The decision comes just weeks after President Trump ordered a freeze on US aid spending and told European nations they needed to boost defence spending considerably.
The UK’s aid cut was one in a series made since 2020. The country’s aid budget is now at its lowest for decades, with funding for long-standing recipients and humanitarian emergencies particularly hit. The UK is not alone – France and Germany have also cut aid budgets in recent years.
But the European cuts, while meaningful, are dwarfed by the impact of the Trump administration’s decision to shutter USAID and freeze almost all of its federal aid spending. The move calls into question the modern system of aid and development, in which the US has had a central role, including funding major UN agencies and supporting massive basic healthcare programmes.
On 20 January 2025, the Trump administration issued an executive order imposing a 90-day freeze on all US foreign development assistance. By the end of the day on 1 February, the website of USAID, which manages most of the roughly $60 billion US aid budget, was offline.
There are legal challenges to the closure, including from members of Congress, and some suggestions the administration may reconstitute a diminished agency under the State Department. But in the past week, the administration announced the initial review was over and thousands of aid delivery contracts were terminated.
The USAID shutdown will have wide-reaching but potentially not so visible effects, because the constituencies affected are not powerful. In 2023, the US accounted for 29 per cent of all OECD countries’ aid funding – the UK was just over 8 per cent.
The US is a foundational funder of key international agencies – providing $2 billion of the UN refugee agency, UNHCR’s $4.8 billion of donor funding in 2024, for example.
The Center for Global Development finds the US represented a fifth of all foreign assistance to eight poor countries, mainly for basic healthcare and emergency assistance. Critical Western security partners, like Jordan, depend on USAID to support essential services and for refugees.
Waivers of the freeze for some life-saving aid were announced, but with staff laid off and programmes disrupted, there is significant confusion about whether these waivers can or will be applied.
Humanitarian workers have told US news sources that PEPFAR, the flagship anti-AIDS programme, is in disarray with drugs going undelivered – despite the administration saying some HIV funding would resume.
The World Health Organization reported that HIV treatments in 50 countries have been suspended, with polio and mpox efforts also affected. Support for Ukraine, the largest USAID recipient ($37 billion since the invasion), including agricultural, psychological and medical aid, is all now in doubt.