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The UK Government has now confirmed what many suspected: Britain's global priorities are shifting. A new Foreign Office report reveals that foreign aid spending will be slashed by 40%. The cuts will hit hardest in Africa, with children's education, women's health and access to clean water all facing steep reductions. Funding for the Occupied Palestinian Territories will fall by 21%, despite earlier assurances it would be protected. Officials have admitted that the decision was driven in part by pressure from Washington to increase defence spending.
This is not a mere budgetary adjustment. It reflects a deeper redefinition of what British power now means. Britain's 2025 Strategic Defence Review, launched last month, set out to redefine the UK's national power. The Ministry of Defence is being strengthened with fresh billions; the Foreign, Commonwealth and Development Office is being hollowed out. Aid is no longer seen as strategy. It is collateral damage.
The numbers are unambiguous. Defence spending will rise to 2.5% of GDP by 2027, with ambitions for 3% in the next Parliament. That growth is already under way: £5 billion was injected into tech investment immediately after the SDR's publication. Other pots of money are being found for defence.
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In contrast, aid spending is set to fall from 0.5% to 0.3% of Gross National Income. It is the lowest level since 1999 and comes at a time when aid funding is already under severe strain, increasingly diverted to cover the growing costs of supporting refugees and asylum seekers. In 2020, the UK spent £628m on such support within its borders; by 2024, that figure had surged to £2.8bn. In 2023, such support accounted for 43% of the UK's bilateral aid, which is intended to fund specific projects in developing countries. As the Government itself says, it is "putting the defence industry "at the heart" of its… industrial strategy".
A new Defence Industrial Joint Council - co-chaired by the Defence Secretary and BAE Systems' CEO - has replaced the older Defence Suppliers Forum. Private investors are now welcomed into procurement discussions. Trade unions are at the table, but so are firms like Palantir and venture capitalists from the NATO Innovation Fund. The new consensus: what benefits BAE benefits Britain.
It certainly does. In the last six months, BAE's share price rose 65%, up to 1,936.50p from 763.00p. Rolls-Royce surged more than 50% in the first half of 2025, its market cap surpassing £75 billion. The arms company Babcock International shares have more than doubled in value since January.
These are not speculativ