Space economy and the UK: Lords UK Engagement with Space Committee report

Approximate read time: 20 minutes

On 9 July 2026 the House of Lords is scheduled to debate the UK Engagement with Space Committee report, ‘The space economy: Act now or lose out’, (4 November 2025, HL Paper 190 of session 2024–26).

1. Growth of the space economy

The global space economy is growing in terms of value and complexity as to what can be achieved, and its importance to nations, businesses and individuals, also continues to evolve. Discussions of the global space economy typically refer to two distinct elements: upstream and downstream.^[1] Upstream refers to the systems and infrastructure that make spaceflight possible and includes the manufacturing of satellites and orbital vehicles and their launch. Downstream refers to the services that can be provided via satellites, the most common of which are:^[2]

• Position, navigation and timing (PNT): Satellite constellations which send users an accurate measure of their time and location. The US’s global positioning system (GPS) is the world’s most high-profile PNT system.
• Communication: Satellites which provide television, broadband, telephone and data transfer services.
• Earth observation: Satellites which image the Earth using remote sensing technology. This category also covers meteorological satellites.

As space exploration has developed, what was once the province of national governments is now populated by a range of actors and upstream and downstream activities, as summarised by Professor James Clay Moltz at the Institute for Regional and International Security (IRIS):

• Civil: Non-military and non-commercial activities in orbit or deep space, usually financed by governments. Space science, robotic exploration and human spaceflight fall into this category.
• Commercial: Activities in or related to space conducted by private sector actors. These include the provision of satellite communications, Earth observation and launch services.
• Military: Activities in space conducted by the armed forces and designed to support military activity on Earth or project power in space.^[3]

The economic value of the global space sector, and the number of actors involved in it, has grown substantially over recent years. The UK Engagement with Space Committee highlighted the following metrics:

• Economic growth: The global space sector is currently valued at over $469bn.^[4] Many expect it to grow significantly—while estimates vary and are contested, several witnesses cited a recent report that predicted that the global space economy will be worth £1.8tn by 2035.^[5] Over $47bn of private capital has been invested in the global space sector since 2015, growing on average by 21% annually.
• Growth in the number of satellites: The number of satellites in orbit has grown significantly, increasing from 2,000 to around 11,500 over the past 10 years. While estimates vary, the number of satellites is predicted to rise rapidly in coming years due to increasing commercial activity and the proliferation of satellite constellations.
• Growth in the number of actors in space: Whilst space used to be the preserve of wealthy, technologically advanced states, there are now over 90 countries with their own satellites or registered companies with satellites. There is also a growing number of commercial actors in space—in the UK alone, the number of commercial actors in the space sector increased from 227 in 2006 to 1,907 in 2024.
• Growth in societal reliance on space: As satellite technology develops, societies are becoming rapidly more reliant on space, with economic activity and critical infrastructure increasingly intertwined with satellite services.^[6]

Companies involved in the space economy have attracted increasing interest from investors. SpaceX—which also includes other businesses such as xAI—recently reportedly became the world’s fifth most valuable company after launching on the NASDAQ stock exchange.^[7]

Space is also becoming increasingly congested. Data from the United Nations Office for Outer Space Affairs reveals a significant rise in objects launched into space (which includes satellites, probes, landers, crewed spacecrafts, and space station flight elements) in recent years as shown in figure 1 of this briefing.

Figure 1. Number of objects launched into space by year (1957–2024)

2. UK space industry

The UK space industry supports a range of public services, particularly through satellite data and imagery, such as disaster relief, telecommunications, global positioning systems, and weather forecasting. According to data updated in August 2025 by the UK Space Agency (UKSA), the UK’s space industries have grown in real terms by an average of 3.3% per year since financial year 2009/10.^[8] In the financial year 2022/23 (the most recent year analysed in the release):

• Space industry employment [in the UK] exhibited growth of 3,521 [jobs] (+7%) relative to 2021/22, with an estimated 55,550 full time equivalents (FTEs) and a further 81,400 indirectly supported jobs across the supply chain.
• Sectors that rely on satellite services also represent a larger share of GDP in 2022/23 compared to 2021/22 (18% of total UK GDP compared to 16% in 2021/22), driven by the economy’s return to growth following the lifting of Covid-19 related lockdown restrictions, especially by the petroleum sector—a key user of satellite services.
• However, partly resulting from wider macroeconomic challenges (including high rates of inflation) […] in real terms UK space industry incomewas £18.6bn in 2022/23, 9% lower than 2021/22, with GVA falling by 7.5%.
• The reduction in real GVA alongside an increase in employment meant that estimated productivity fell from £148,000 to £129,000 GVA per employee although remains more than twice the national average of £61,729.^[9]

The UKSA said that the nature of the space sector meant that it is “particularly sensitive” to increases in input costs (including energy) due to the war in Ukraine, “lingering effects from the Covid-19 pandemic, and trade complexities with the EU”.^[10]

The release also highlighted evidence from survey respondents in the UK space sector that there “continued to be significant recruitment difficulties”. UKSA maintained that barriers to hiring international talent, including visa constraints and reduced access to the EU labour market, “have made it challenging for UK organisations to recruit the necessary talent”. They also noted a lack of availability in skilled candidates for vacancies.

Several survey respondents reported an ongoing shortage of skilled candidates, which has restricted company growth, and in some cases, led to lost revenue. This effect is supported by the reported skills and qualifications among employees in firms responding to the survey, where the proportion of university-educated employees has reduced to 69% (from 80% in 2021/22) and [the] proportion of vocationally qualified staff has reduced to 8% (from 11% in 2021/22).^[11]

The UK Engagement with Space Committee also highlighted data on the growth of the number of UK space firms between 2014 and 2024 as shown in figure 2.

Figure 2. Growth in number of UK space firms (2006–2024)

3. UK Engagement with Space Committee’s report

The House of Lords UK Engagement with Space Committee examined various facets of the global space economy and the UK’s potential role in it, arguing that it would increasingly shape the nation’s future over the years to come:

[…] the importance of satellite infrastructure and the opportunities presented by the space economy will grow significantly. Space’s microgravity, vacuum environment offers the potential to grow human tissue, including organs, and produce purer crystals, leading to higher-quality semiconductors and pharmaceuticals. Work is underway to develop space-based solar power stations, which could function as an alternative source of clean energy. These activities will require advanced in-space logistics, with satellite repair, debris removal, and refuelling a growing business opportunity. Every child born in 2025 will grow up with their lives on Earth more and more dominated by what happens in space.^[12]

The committee observed many exciting developments in space technologies, creating opportunities for significant economic growth and benefits both for wider society and for local communities. However, it noted that there was increasing global competition from both public and private sector actors to seize these opportunities.

The UK published its ‘National space strategy’ in 2021 under the former Conservative government.^[13] This was followed by the 2022 ‘Defence space strategy’,^[14] the 2023 ‘National space strategy in action’,^[15] and the 2024 ‘Space industrial plan’.^[16] The space industrial plan outlined five priority areas in which national space capability should be developed:

• space domain awareness (SDA)
• in-orbit, servicing assembly and manufacturing (ISAM)
• Earth observation (EO)
• position, navigation and timing (PNT)
• satellite communication technology.

The 2025 ‘Modern industrial strategy’ also identified these five capabilities as priorities as well as the development of launch capability.^[17]

However, since the national space strategy “signalled [the UK’s] intention to grow into a world-leading space power”, the committee argued the government had failed to turn these ambitions into reality. It said:

A common theme through the evidence was that while UK space policy documents were ambitious, they were not being implemented or delivered upon. While an implementation plan was promised in the 2024 space industrial plan, this has not yet been delivered. Carol Buxton, doctoral researcher at the University of Birmingham, suggested that both the NSS [national space strategy] and the 2023 follow-up were “yet to live up to the UK Space Agency’s ambitious vision and translate into outputs”. She particularly noted “the absence of a detailed implementation plan”. The Open University concurred, describing the NSS as a “useful overarching framework” that lacks a plan for implementation. In terms of actions taken since the publication of the strategy, Mr Baldwin [Colin Baldwin, executive director of UKspace] said that “progress has been slower than we had all hoped; there was a lot of anticipation, and it has taken some time”.^[18]

The committee said the national space strategy was a good first step in establishing a coherent, cross-government space strategy. However, it said that the document, and subsequent follow-ups, “still do not provide detailed and costed implementation plans that can provide certainty to stakeholders”. It argued the current strategy was ambitious but insufficiently focused, and risked spreading resources too thinly. The committee said a more targeted approach was essential for maximising the impact of public investment and fostering successful space businesses in the UK.

The committee recommended that, rather than producing a new strategy, the government should focus on improving the implementation and delivery of the current strategy. It said ministers should set out clear implementation plans for the delivery of capability goals laid out in the modern industrial strategy.

Alongside this clearer strategic direction, the committee said that the government needed to champion the space sector as crucial to future economic growth and national resilience, and that the structure of government should be reformed to deliver cross-departmental space policy. It said that the UK has a host of innovative space start-ups which struggle to scale. If firms cannot access the capital they need in the UK, the committee contended that “they will be tempted to move operations elsewhere”.

The committee summarised its full recommendations as follows:

• Provide a coherent strategic direction with clear delivery plans—the UK space sector lacks the strategic direction necessary for success. The government needs to provide clear, consistent and funded plans on the delivery of core national space capabilities. This will involve making choices.
• Focus on the development of multi-use technologies—we recognise the importance of satellite technology to the UK’s national security and defence, with the Ministry of Defence contributing roughly half of the UK’s space expenditure. The UK’s space strategy must prioritise those national capabilities which meet UK security and defence requirements as well as offering multi-use potential for commercial exploitation and sectoral growth in the UK.
• Ensure that structures of government are adequate to deliver cross-governmental space policy—existing government structures impede the design and delivery of UK space policy. The UK requires a dedicated space minister, working across DSIT [Department for Science, Innovation and Technology] and MoD [Ministry of Defence], who should be responsible for driving cross-government working. Government also needs a designated space champion to lead government engagement with industry, investors, and academia.
• Reform the UK’s space funding model to allow firms to grow and scale—the UK’s funding model for space requires a decisive shift from the current grant-based approach designed to propel research and development, to one in which government procurement is used to crowd in private investment and strengthen national capabilities.
• Ensure the UK remains a world-leader in future space regulation—the fast-moving nature of the global space economy means that states with agile, forward-looking regulation will hold an immense advantage.
• Address skills challenges within the space sector—the space skills challenge is one of the core impediments to development of the sector. The government needs to create a space skills taskforce with the authority to drive skills development policy and maintain UK competitiveness.
• Adopt a strategic approach to international partnerships—recently, space policies in the US, EU, and a number of countries around the world have seen major changes. The UK needs to be clear-eyed about where its international efforts should be concentrated and ensure that space partnerships are a core consideration in wider foreign policy development.
• Promote space safety and sustainability on the international stage—the space domain is subject to problems such as space debris which cannot be solved by the UK alone and require collective action. Ensuring the safety of space as an operating environment should be a diplomatic priority for the UK.^[19]

4. Government response to the committee’s report

The government responded to the committee’s report on 30 January 2026.^[20] It agreed that space was “fundamental to the UK’s prosperity, security, and global influence”, with space-based services and data underpinning components of the UK’s critical national infrastructure (CNI) and enabling the monitoring and reporting of several risks in the national security risk assessment. It also underpins essential services across communications, navigation, finance, energy, and emergency response, as well as driving innovation and supporting high-value jobs.

The government highlighted several developments in the past year:

The UK Space Agency (UKSA) catalysed at least £2.2bn in investment and revenue within the sector in 2024/25. An evaluation of the benefits of the UK’s investments in the European Space Agency (ESA) showed a direct economic return of £7.49 for every £1 invested in ESA. The United Kingdom Space Command (UKSC) has grown to become the largest space organisation outside the US; integrating space into Operations.

The first full year of operations for the National Space Operations Centre (NSpOC) saw over 30,000 collision alerts issued to UK-licensed satellite operators and the monitoring of 870 uncontrolled re-entries; it also tracked over 1800 ballistic missile launches and provided over 25,000 space products to support military operations. The UK celebrated the launch of the European Space Agency (ESA) Biomass mission, and launched Europe’s first dedicated carbon dioxide monitoring satellite, MicroCarb, in partnership with France. Most recently, the outcomes of the ESA Council of Ministers 2025 was a significant success for UK ambitions in space, with further investment planned in missions such as VIGIL (space weather), the UK-built Rosalind Franklin Mars rover, and commercial access-to-space initiatives through the European Launcher Challenge and Boost! programmes.^[21]

Turning to the committee’s recommendations, ministers said that the government was building on the work undertaken since the 2021 ‘National space strategy’ and 2024 ‘Space industrial plan’ to ensure “a coherent and consistent” offer to the sector. It said that it had increased civil space spending and taken steps to ensure a “one-government” approach to space:

[…] a strong “one government” approach to space [will] be driven in part by widening the remit of the UK Space Agency to include policy and strategy, and merging UKSA into Department for Science, Innovation and Technology (DSIT) to bring decisions closer to ministers (completing on 1 April 2026). Funded, clear delivery plans across a focused range of capabilities will also support the “one government” approach.

The government has increased civil space spending through UKSA by 8% for 2025/2026, with nearly £3.5bn allocated to UKSA from 2025/2026 to 2029/2030 inclusive.^[22]

The government has made several funding announcements relevant to the space sector since the publication of its response, including a new package to back high-growth space technologies.^[23] As part of that package, the government said that—in addition to the £1.7bn committed to ESA programmes in November 2025—it was allocating more than £500mn to national space programmes. This was broken down as follows:

• £105mn to develop civil capabilities for in-orbit servicing and manufacturing (ISAM)
• £85mn to develop the National Space Operations Centre, including £40mn to build a new ground‑based sensing network, supporting the 24/7 requirement to protect satellites and manage an increasingly crowded space environment
• £80mn to deliver the ‘Connectivity in low Earth orbit’ (C-LEO) programme, including for a new £30m funding call to support UK businesses developing smarter satellites, advanced hardware and AI‑enabled data delivery
• £65mn for the ‘National space innovation programme’ to accelerate breakthrough technologies and boost commercialisation
• £40mn for the ‘Unlocking space programme’ to drive market demand for space technology, develop national security capabilities and attract private investment to support the scale up of UK firms
• £37mn to develop space clusters, building on local strengths and ensuring the benefits of space reach every corner of the UK
• £20mn to accelerate spaceport infrastructure development in Scotland

In recent months, the government has also announced:

• £19mn to support British companies developing next-generation space technologies announced at London Tech Week in June 2026^[24]
• a pathway for the manufacture of drugs in space, as set out in the ‘Life sciences sector plan’^[25]

On its “one government” approach, the government’s response contended that the widening of the remit of UKSA to include strategy and policy, and its merger into DSIT, would achieve the following:

• Strengthen coherence of space policy across government. By bringing DSIT’s policy leadership together with the technical and delivery expertise of UKSA, the merger will ensure there is a centre of expertise that is sufficiently resourced to lead and cohere activity across government and delivery bodies to reduce fragmentation and improve alignment across departments.
• Enhance strategic coordination. The new structure will enable more effective cross-government governance through ensuring our “one government” approach to space is able to draw on the full range of strategy, policy and delivery expertise in both organisations while reducing duplication and the risks of siloed working. In addition, the merger will ensure the sector has clear and uncomplicated routes for engaging with the government.
• Retain technical expertise. The agency’s specialist knowledge will remain a core capability of the new UK Space Agency, with the changes enhancing the involvement of technical experts in policy development and delivery.^[26]

Amongst the government’s response to the committee’s other recommendations, it said that it recognised the “importance of promoting public awareness of space and inspiring the next generation of talent”.^[27] It said the UK Space Agency spent £7.3mn in 2024/25 on its ‘Education and future workforce’ programme, which delivered targeted space engagement to the public and key audiences.

On national security, the government said there was cross-government agreement that the UK has assured and responsive access to space that is commercially viable, has polar and equatorial capability, delivers for UK and allied national security and defence requirements and supports an ecosystem of UK and international launch companies. To this end, it said that at the ESA Council of Ministers in November 2025 the UK committed a “record” £162mn for launch programmes.^[28]

Further on international partnerships, and collaboration on European Union space and satellite programmes in particular, the response said:

The government recognises the importance of providing clarity to industry regarding future UK participation in EU space programmes, including flagship initiative such as Galileo and IRIS. However, the terms for third country participation in these programmes remain unknown at this time. As such, the UK is unable to make decisions on future participation, as the necessary terms and conditions for participation are not yet available.

At present, the UK continues to participate in Copernicus until the end of the current multiannual financial framework. Any future participation in EU space programmes will be subject to negotiations with the EU and will be carefully assessed to ensure that such involvement is in the best interests of the UK and represents value for money.

The government will manage any future decisions regarding participation in these programmes through the usual business case process. This approach ensures that all relevant opportunities and risks are thoroughly analysed, and that decisions are made based on robust evidence and in line with established procedures.^[29]

5. Read more

• House of Commons Library, ‘The UK space industry’, 30 June 2025
• UK Space Agency, ‘Size and health of the UK space industry 2024’, updated 20 August 2025
• European Space Agency, ‘Report on the space economy 2025’, March 2025
• HM Government, ‘National space strategy’, updated 1 February 2022

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Image by NASA on Unsplash