CGD Report: UK Aid Budget Faces £400m Shortfall by 2027

The UK is projected to fall short of its 2027 international aid spending target by an estimated £400 million, according to a new analysis from the Center for Global Development. The organization's calculations indicate that inflation has outpaced the forecasts used by the Treasury to set current budget levels. This discrepancy means the country's national income will be higher than anticipated, while the real value of aid spending remains fixed.

The 0.3% target for 2027 is a reduction from the 0.7% goal promised in Labour's election manifesto. Prime Minister Keir Starmer lowered the threshold to redirect funds toward defence spending. The CGD researchers noted that the central forecast implies a £410 million shortfall, resulting in aid spending of just 0.29% of national income. They identified a £580 million gap, or 0.28%, as a very plausible outcome, while the most conservative estimate still points to a £250 million deficit.

Ian Mitchell, a senior fellow at the CGD and co-director of its Europe programme, described these figures as material shortfalls in the spending power of UK aid. He stated that closing even the £400 million gap would halve the planned cuts to Africa. Mitchell warned that these reductions are likely to cost thousands of lives and effectively amount to a UK exit from the south and east of the continent. The researchers attributed the gap to higher-than-expected inflation and a 2025 policy change affecting the Foreign, Commonwealth and Development Office budget.

Former minister Fleur Anderson, who sits on the foreign affairs select committee, argued that missing the target is not an abstract accounting issue. She cited communities without clean water, girls leaving school, undelivered vaccines, and cuts to peace programmes in war zones as tangible consequences. Anderson said she wants to see higher aid spending in the upcoming budget to at least hit the reduced target that was set. She added that she would prefer the government to reverse the cuts altogether in time.

The government has prioritized funding through multilateral bodies such as the International Development Association and Gavi. It has also maintained humanitarian support levels. Data released by the FCDO in September showed that funding to the least-developed and low-income countries fell by 6.7%, or £118 million. The UK's overall official development assistance budget dropped to 0.44% of gross national income in 2025, down from 0.5% in 2024, a decline of £987 million.

An FCDO spokesperson noted that the multi-year aid allocations published in March 2026 are based on gross national income at the time of the 2025 spending review. The spokesperson said that moving to a fixed budget reduces volatility and provides stability for high-impact aid programmes. The CGD has urged ministers to consider adding funds for international aid in this week's budget to avoid criticism for missing the target.

Opposition parties the Conservatives and Reform UK have pledged to cut aid from about £9 billion a year to £1 billion. This proposed level would leave the UK unable to cover its existing contributions to the UN and World Bank. The budget announcement is scheduled for this week.