New Lords Report Highlights UK's Declining Position in the Space Sector
The UK Government has faced criticism from peers regarding its limited response and ambition towards strengthening Britain’s standing within the international space sector. A parliamentary committee has cautioned that, without immediate action to address leadership challenges, strategic priorities, and funding gaps, the UK is at risk of losing its competitive advantage in the global space industry.
A recent report issued by the House of Lords’ cross-party UK Engagement with Space Committee, “The Space Economy: Act Now or Lose Out,” outlines concerns about the nation’s competitiveness, warning that current trends could result in the loss of up to half of the UK’s global market share in the sector. The UK space industry currently accounts for between 4.3% and 6.1% of the global space economy.
The report also underscores the significance of the space industry, which supports 18% of UK GDP through satellite services, contributes £18.6 billion to the UK economy, and employs approximately 55,000 people. Despite observing a decrease in Gross Value Added for 2022/23, official figures show productivity per employee remains more than double the national average.
Scotland’s contribution to the UK’s space industry is particularly noteworthy, with initiatives led by the Scottish Government aimed at positioning Scotland as Europe’s foremost space nation. Last year, the sector generated £381 million in income and contributed £880 million to Scotland’s economy.
The committee found that current government measures are insufficient to sustain or advance the UK’s ambitions in space. Feedback from industry experts revealed that domestic space companies face significant barriers in accessing growth capital, resulting in relocation overseas. Financial constraints facing universities, central to the sector’s development, also threaten the UK’s position in space science.
In addition to funding issues, 95% of UK space firms indicate severe skills shortages, with talent departing the sector for more attractive opportunities. This ongoing drain of expertise, combined with escalating geopolitical tensions, puts established partnerships, especially those with the United States, at risk.
The report attributes these challenges predominantly to a lack of strong governmental leadership, including an absence of clear strategic direction, inconsistent funding, and organizational fragmentation, all of which undermine UK space policy and collectively hinder one of the country’s most innovative industries. As noted by an expert, “We haven’t seen a breakout UK space business in a long time.”
The United Kingdom, like many nations, relies significantly on SpaceX for launch services. The committee expressed concern about dependency on SpaceX, highlighting “rising demand for SpaceX launches and possible politicization of Starlink.” Although there is currently no risk to access, the report encourages the government to “seek out diversified or sovereign alternatives where feasible” and to investigate how losing SpaceX access could affect the country. The report adds: “A sovereign launch capacity would strengthen national security, underpin the growth of the UK’s space and satellite industries, and ensure that Britain remains a trusted and resilient partner within the allied space operations.”
Brexit may also be a contributing factor. While the UK Space Agency (UKSA) remains a member of the European Space Agency (ESA), the UK is no longer a full participant in certain EU space programs, such as Copernicus, which is run by the European Union and implemented in partnership with ESA. Furthermore, reaching European markets has become more “complex and burdensome.”
To remedy the situation, the report calls for bold and decisive government action. Key recommendations include the appointment of a dedicated Space Minister and Space Champion to drive government-industry collaboration, reforms to the national funding model, and the adoption of adaptive regulatory frameworks tailored to the space sector.
The report also recommends revising the current strategy to prioritize the development of multi-use technologies, especially those pertinent to security and defense, and establishing a Space Skills Taskforce empowered to advance workforce development and maintain UK competitiveness.
It is unclear what impact the government’s August 2025 decision to merge the 15-year-old UK Space Agency, responsible for civilian space applications and science exploration, within the Department for Science, Innovation and Technology (DSIT), will have on the country’s space ambitions.
DSIT has been responsible for all of UKSA’s funding since 2023 and to date, Britain has allocated most of its civilian space budget to the European Space Agency. The UK, represented by UKSA, is ESA’s fourth-largest budget contributor after Germany, France and Italy. The absorption of UKSA into DSIT could see the UK’s position weakened within ESA.
Baroness Ashton, Chair of the UK Engagement with Space Committee, stated: “Only the most strategic and forward-looking nations will capture the economic and scientific rewards of this new space age. With the right leadership, coordination, and investment, the UK can be among them. Space is transforming the world, and our report highlights many positive aspects. Britain should help lead this transformation, lest it fall behind.”
Related:
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Failure to launch: the rise and fall of the UK Space Agency
Size and Health of the UK Space Industry 2024
Evaluating the benefits of the UK’s investments in the European Space Agency: Executive Summary