In a significant policy shift, the UK government has announced plans to increase defence spending to 2.5% of GDP by 2027, financed in part by reducing the international aid budget from 0.5% to 0.3% of GDP. This decision reflects the UK’s response to an increasingly volatile global landscape, where security threats are growing, and strategic alliances are evolving. But it also raises pressing questions about how to ensure that the UK’s remaining aid budget is spent to maximum effect.

Now, more than ever, the UK must take a strategic approach to development funding, ensuring that it complements and reinforces defence objectives. The reality is that development and security are inseparable. Aid is not just about alleviating poverty—it plays a critical role in preventing conflict, stabilising fragile states, and reducing the need for costly military interventions in the future. With a smaller pot of development funding available, the UK has an opportunity to rethink its approach, focusing on where aid can be most impactful and ensuring it works in lockstep with defence and diplomacy.

Investing in fragile and conflict-affected states is one of the most effective ways to promote long-term stability. Many of today’s most persistent security threats – whether terrorism, mass migration, or state collapse – stem from weak governance, economic desperation, and social unrest. Development funding must target these root causes, ensuring that communities have access to livelihoods, basic services, and governance structures that allow them to resolve disputes peacefully.

Without these foundations, military interventions may provide short-term stability but fail to prevent future crises.

The UK should also prioritize conflict prevention and resolution in its aid spending. Too often, international responses to instability are reactive rather than proactive, deploying resources only after violence has erupted. Investing in early warning systems, mediation efforts, and local peacebuilding initiatives can reduce the likelihood of conflicts escalating to the point where military force is required. A well-funded and coordinated approach to conflict prevention, backed by both development and defence expertise, can save lives and reduce the long-term costs of intervention.

Security sector reform is another crucial area where development and defence efforts must align. Supporting partner governments to develop professional, accountable security forces helps prevent abuses and builds public trust in state institutions. The absence of effective policing and justice systems can create vacuums that extremist groups and criminal networks exploit. Aid funding should be used to strengthen local law enforcement and judicial institutions, ensuring that security is delivered in a way that respects human rights and upholds the rule of law.

To make the most of a reduced aid budget, the UK needs to integrate development and defence planning more effectively. That means improving coordination between government departments, embedding development advisors within defence teams, and ensuring that civilian and military personnel are trained to work together in complex environments. Too often, defence and development actors operate in silos, pursuing parallel but disconnected agendas. A more joined-up approach will ensure that aid spending reinforces security objectives rather than operating in isolation.

The UK should also look to leverage multilateral partnerships to extend the impact of its aid spending. Working more closely with NATO, the UN, and allied governments can help ensure that the UK’s contributions complement broader international efforts. Partnering with the private sector is another way to amplify the impact of aid funding. Encouraging responsible investment in fragile states (whether through infrastructure development, job creation, or digital connectivity) can provide sustainable alternatives to conflict-driven economies.

Transparency and accountability will be critical in this new aid landscape. With a reduced budget, every pound spent must deliver measurable results. The UK should commit to clear benchmarks for success, regular audits, and greater transparency about where and how aid is deployed. Demonstrating impact will be essential not just for ensuring value for money but for maintaining public and political support for aid spending in a climate where it is under increasing scrutiny.

This shift in funding priorities reflects the UK’s evolving role in global affairs, but it does not have to mean a retreat from development. Instead, it should serve as a catalyst for smarter, more targeted aid spending – one that works hand in hand with defence and diplomacy to create lasting stability. The choice is not between security and development, but how to integrate them effectively to build a safer, more prosperous world.

Sinead Magill is Palladium co-CEO based in London UK. Contact info@thepalladiumgroup.com to get in touch.