The consequences of international aid cuts
The latest unprecedented cuts of 23.1% in global official development assistance (ODA) as noted by figures released by the OECD yesterday are not surprising. But they come with real-world consequences, particularly for some of the world’s most vulnerable people, with life saving humanitarian assistance declining by -35.8%, amounting to $15.5 billion in 2025.
A loss of trust as well as finance
Trust in international cooperation is hard to build and easily lost, and Europe would do well to remember that.
How these cuts have been implemented matter as much as their scale. When done hastily, with limited consultation, or through abrupt funding stops rather than gradual tapering, they risk doing long-term damage, not only to programmes on the ground, but also to the credibility of European countries and the EU.
Public finances are under strain everywhere, but the consequences and options are vastly different.
Yes, European public finances are under strain, and will likely face additional pressure from rising energy costs linked to the Israel/US - Iran conflict and Russia’s war against Ukraine. But in many fragile and Least Developed Country (LDC) contexts suffering significant ODA cuts, the fiscal constraints are far more acute. Reduced ODA, whether channelled directly or via multilateral agencies will make it significantly harder to finance basic human services. While ODA has a number of limitations, it is also a hard-to-replace source of much needed funding where other flows are absent or scarce, typically in sectors or contexts where market, fiscal and political conditions are not conducive to other forms of financing.
Alongside, at times, declining solidarity, there is growing pressure for aid to deliver “mutual benefits” to donor countries
The domestic drivers of cuts in Europe
According to the OECD, ODA from 17 EU member states that are DAC members fell, contributing to an overall 9.8% drop in aid for EU members and while at the same time ODA from the EU Institutions declined by 13.8% in 2025.
The drivers of these cuts are primarily domestic. Political choices in donor countries, most significantly in the US, but also across much of Europe, shaped by shifting political priorities, fiscal pressures, and increasingly sceptical electorates, are central. Concerns about public spending, health systems, housing, and cost of living weigh heavily. As is the desire to count first year asylum seeker costs within Europe as ODA, even if the trend here significantly declined in 2025.
According to the OECD, 95.7% of the total decline in the amount of ODA comes from the actions of the United States, United Kingdom, Germany, France and Japan. Still, there are cuts all over Europe and the overall trend reflects deliberate decisions to reallocate public resources. There were a few increases in 2025 in EU member states from Denmark (+3.0%), Sweden (+9.6%), Luxembourg (+8.9%), Hungary, (+45.7%) and minimally from Italy (+0.03%). Yet Sweden has already committed to future cuts and Hungary has a limited amount from a low base.
The geopolitics and changing geographic priorities of aid
There is also a geopolitical dimension. Rising defence spending is part of the picture. Yet as the OECD noted in 2025, “Ukraine received more ODA from DAC members combined in 2025 than did all LDCs ($28.1 billion, a 22.3% decline) and more than all countries in sub-Saharan Africa ($29.2 billion, a 23.0% decline)”. But beyond geography, geopolitics is also promoting a shift in how remaining ODA is framed and used. Alongside, at times, declining solidarity, there is growing pressure for aid to deliver “mutual benefits” to donor countries.
The need to find high quality sustainable development financing and genuinely mutually beneficial partnerships is becoming more, not less, urgent
This is not inherently problematic, but it has limits. Mutual benefit cannot be achieved in all contexts and risks being overstated if not supported by broader policy coherence, non-aid instruments, and stronger engagement with private investment and domestic resource mobilisation that genuinely promotes mutual rather than donor self-interest.
What’s next?
The OECD predict further cuts in 2026, and there are few indications that this will stop. Are there any positives in this shift? ODA is useful and has its place, but few will mourn the decline of ODA as the central organising principle of some international partnerships. The transition will be difficult for major recipients, yet also donors themselves.
More broadly, in an increasingly contested global environment, the need to find high quality sustainable development financing and genuinely mutually beneficial partnerships is becoming more, not less, urgent and consequential. There is another big marker on the horizon. The European Union is currently negotiating its overall budget including its Global Europe ambitions for the period 2028-2034 incorporating both ODA and wider mutually beneficial partnership goals. A lowering of ambitions here is unlikely to serve either Europe or its partners well.
The views are those of the author and not necessarily those of ECDPM.
