From Finland to the UK, European countries are slashing aid. What does it mean for climate funds?

Political changes, higher defence spending and a shift in focus towards national priorities have seen many European aid budgets slashed recently.

Several key Western European countries including the UK, Switzerland, Germany, France and the Netherlands have slashed their aid budgets considerably in the last few months.

This trend comes amid escalating geopolitical tensions and global economic uncertainty, as countries choose to focus more on their own needs, such as increasing defence spending and domestic government stimulus measures.

Foreign aid is mainly measured through Official Development Assistance (ODA), which wealthier nations offer developing countries. The Organisation of Economic Cooperation and Development recommends that donor nations try to allocate at least 0.7 per cent of their Gross National Income (GNI) to foreign aid.

Belgium has revealed that it will be cutting its aid funding by 25 per cent over five years, while the Netherlands has reduced it by 30 per cent and France by 37 per cent.

These budget trims could have potentially devastating consequences for vulnerable countries which rely heavily on foreign financial aid, such as Tanzania, Bangladesh and Zambia.

The aid cuts could also derail the climate finance goals developed countries pledged to meet at COP29 back in November 2024.

Why are so many European countries cutting aid budgets?

Political changes, such as far right parties coming into power in Finland and Sweden, have heavily influenced aid cuts. European conflicts such as the Russia-Ukraine war and the threat of an escalating trade war with the US have also led to nations prioritising defence spending over aid money.

The UK’s prime minister Keir Starmer announced in February that aid levels would be slashed from the current 0.5 per cent of GNI to a historically low 0.3 per cent of GNI by 2027.

The country has been systematically reducing aid funding in the last few years, due to a lagging post-Brexit economy and the economic impact of the pandemic. Defence spending will be hiked to 2.5 per cent of GDP from April 2027.

Similarly, France has been shaving aid financing while dealing with a record deficit and ongoing political turmoil. The government has also been facing far-right allegations that development aid is wasting taxpayer money.

The Netherlands has also made aid cuts in order to focus more on national interests, and will integrate development aid more closely with Dutch trade, economic and migration policies.

This means that the country will now channel its aid money only into ventures which benefit it the most, such as food security, water management and child and maternal healthcare.

Finland has adopted a similar stance of providing aid to only those causes which benefit Finnish interests the most, whereas Sweden is focusing more on defence, policing and welfare services.

But experts have pointed out the dangers of losing sight of the systemic, global nature of climate change, in favour of domestic issues.

“Climate-induced disasters don’t respect borders,” says Carsten Brinkschulte, CEO and founder of Dryad Networks, a tech company that tackles wildfires.

“Cutting aid, particularly funding that supports climate adaptation and resilience, is not just short-sighted but also economically unsound. Preventative investment in vulnerable regions is significantly cheaper than managing the fallout of unmanaged climate risk,” he says.

What does this mean for climate finance goals set at COP29?

At COP29, developed countries agreed to provide at least $300 billion (€277.8bn) in climate finance yearly to developing countries by 2035. This is triple the previous $100bn (€92.6bn) target, with an overall goal of at least $1.3 trillion (€1.2tn) raised by 2035.

However, the recent European aid cuts might make it much harder for Western and Northern European countries to meet this ambitious target.

In theory, developed countries are supposed to maintain separate budgets for development aid and climate finance. This means that climate finance should be provided on top of, and not instead of, normal development aid.

Some things contributing to the difficulty of maintaining separate budgets include an overlap in goals, such as several development projects also having climate benefits. Limited resources and a lack of definitions also add to this issue.

Some countries using one fund for both tend to earmark money for climate projects and broader development goals, to create some distinction.

Many countries also meet their climate finance goals by re-labelling existing development aid as climate finance, instead of providing new funds like they should. In 2022, $27bn (€25.1bn) of the $94.2bn (€87.4bn) annual hike in public climate funds was procured from existing development aid.

New Zealand and Luxembourg are among the few developed countries which clearly separate climate finance and development aid.

“The COP’s climate finance goals WILL be affected, but it’s not yet clear by how much. The UK and Sweden have said they remain committed to their climate finance goals.” Sarah Hearn OBE, former UK aid official, tells Euronews Green.

“The Netherlands announced it will reduce climate finance in 2025 as part of its “Netherlands” first approach to aid, and Switzerland has already cut some climate finance. France is reviewing its aid and where its cuts should be made. So the picture is bleak for COP advocates,” she says.

Germany had cut its climate finance to €5.7bn in 2023. However, it pledged to be the biggest climate finance donor at COP29, providing €60m to the Adaptation Fund.

Thanos Verousis, professor of sustainable finance at Vlerick Business School, had a more optimistic view about EU climate finance goals.

“In countries where climate change is still secondary to political priorities, we might see significant deviations from COP commitments. Conversely, in regions like the EU, where climate change remains a top priority, climate finance commitments are likely to stay prominent on the agenda,” he says.

How could smaller European aid budgets impact vulnerable countries?

European development aid helps numerous vulnerable regions and countries all over the world. These funds go towards economic stabilisation, development projects, health programmes, economic and poverty relief, climate change and humanitarian causes, among others.

“Many countries in the Global South face the dual challenges of poverty and climate vulnerability. For them, climate finance is crucial not just for mitigation but also for adaptation,” says Verousis.

“Without adequate protections, cuts to foreign aid will undermine efforts to build climate resilience – such as disaster preparedness, agricultural reforms, and renewable energy initiatives. These reductions will leave these countries even more exposed to economic and environmental shocks, amplifying the risks of both climate change and underdevelopment.”

Niki Ignatiou, head of Women, Peace, and Security at ActionAid UK, pointed out that cutting aid budgets would contribute to worsening human rights crises in some countries.

“Redirecting ODA away from crisis-affected communities to fund further conflict isn’t just morally wrong – it also undermines global stability and the UK’s commitments to human rights and gender justice,” she says.

“The UK Foreign Secretary has acknowledged that the climate crisis is fuelling conflict and displacement – yet slashing ODA to the world’s most climate-impacted communities will only deepen the injustices most acutely felt by women and girls. This decision must be reversed before it causes irreparable harm,” she adds.

Lower aid also means that vulnerable countries lose significant access to key climate tech tools, often vital for them to battle natural disasters.

“These regions are often hit hard by climate events, facing wildfires, floods, droughts, and deforestation. Reducing aid removes access to critical tech innovation and services that can strengthen local climate resilience,” comments Brinkschulte.

“This risks creating a dangerous loop: more climate shocks, more displacement, more economic instability, and greater long-term aid needs. Prevention is the only sustainable strategy.”

How could countries avoid cutting aid?

Instead of cutting foreign aid ruthlessly, several experts advocate for European nations to redirect aid to areas where it is most needed, or treat it as an investment in vulnerable countries and climate change efforts.

Verousis says, “Instead of cutting aid, a more flexible solution could be to reprioritise the allocation of foreign aid. Governments could focus on increasing efficiency, targeting aid more effectively, and leveraging the support of international organisations and development banks.

“This approach would allow for more strategic use of limited resources, while still addressing global needs.”

Looking at aid as investment, instead of donations, could also help reframe European outlooks towards climate finance.

“Reframing aid as investment is one option,” says Brinkschulte. “A euro spent on climate resilience now saves several euros in emergency response, insurance payouts, and migration costs later. Moreover, redirecting subsidies from fossil fuels – still vast in many nations – could generate funding without increasing budget strain.”

Source: https://www.euronews.com/green/2025/03/30/from-finland-to-the-uk-european-countries-are-slashing-aid-what-does-it-mean-for-climate-f