Cuts to overseas aid will worsen shocks to global economy, David Miliband says

Cuts to overseas aid by countries including the US and the UK risk stoking global economic instability amid the humanitarian crisis resulting from the Iran war, David Miliband has said.

The former British foreign secretary and head of the International Rescue Committee (IRC) said the US “abandoning” of its aid programme under Donald Trump would worsen shocks to the global economy that would impact poor and wealthy countries alike.

Miliband also said he regretted that Keir Starmer’s government was slashing the UK’s aid budget, because supporting the world’s poorest was morally the right thing to do and a “good investment for Britain”.

“An untended humanitarian crisis is an incubator of political instability. We are in a more connected world than ever before,” said the former Labour minister. “The Iran war shows how connected we are, but the connections go the other way [from poor to rich countries], too.”

Speaking to the Guardian at the International Monetary Fund and World Bank meetings in Washington, Miliband said the Middle East conflict would increase global poverty and risked displacing millions of people.

“If you think back to 2016 and the scale of the European refugee crisis – it is very hard to be a catastrophist about it, but we know that conflict drives the movement of people,” he said.

With warfare and threats to food security on the rise around the world, western governments cutting their overseas aid budgets were removing support that could help to prevent future global economic instability, Miliband said.

“You could say there could hardly be a worse time to cut the aid budget. Because you have got very significant numbers of people in extreme poverty. We have also got more and more evidence of what works in reducing poverty, and the evidence about the positive impacts of aid are in fact stronger.”

This week, the United Nations said 32.5m people globally could be plunged into poverty by the economic fallout from the Iran war, with developing countries expected to be hit hardest.

Global energy and fertiliser prices have soared since the closure of the strait of Hormuz, which Miliband has labelled a “food security timebomb”, with the potential to cause widespread global hunger.

The conflict comes as western governments, including the US, Germany, France and the UK, cut their aid spending amid elevated borrowing and debt levels across advanced economies and a clamour to increase defence spending.

Figures from the Organisation for Economic Co-operation and Development, published last week, showed rich countrie cut aid spending by $174.3bn (£129bn) in 2025, a decline of almost a quarter from 2024.

Miliband, who is in Washington for meetings at the IMF and World Bank, and to speak at the Semafor world economy conference, said the US under Trump had abandoned its longtime leadership role in global development.

“For moral and strategic reasons it [the US] wanted to be, not a global empire, but a global anchor. And this administration has been explicit about its determination to abandon that role,” Miliband said.

“There are all sorts of things that America has done wrong in the last 80 years, but it [US aid policy] has had a net positive impact – that role of being a global anchor has been a positive one more than a negative one. It is a historic decision to abandon that position.”

Asked for his reflections on how a Labour government was cutting the UK’s aid budget by billions of pounds, Miliband said there was evidence to link lower levels of British aid to rising fatalities around the world.

“There are more ways than the aid budget that the UK plays a role [in supporting global development], but do I regret the cuts to the UK aid budget? Certainly,” he said.

“Britain’s aid budget is not just the right thing to do. It is a good investment for Britain. It has proved its worth, not because aid buys you friends but because aid is one way in which you align your words and your deeds.

“I think that Labour’s internationalism is an important part of its offering to the public. It is a positive string in our bow, not a drag.”