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UK SPACE SECTOR OUTPACES NATIONAL ECONOMY

by Piyasi Mitra
05/12/2024


UK space economy



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The UK space sector is growing faster than the overall UK economy, contributing
over £17.5 billion annually and employing more than 45,000 people, supporting
£360 billion in economic activity through satellite infrastructure, according to
Heligan Group, an investment and advisory group specialising in partnering with
businesses that contribute to global safety and security.

M&A activity has also surged alongside this growth, with transactions climbing
from five in 2013 to 27 in 2023, the data showed.

Simon Heath, partner at Heligan Group, attributed the expansion to technological
advancements and increased government funding. “Advances in technology such as
reusable rockets, orbital refuelling, and in-space manufacturing via 3D printing
are driving the wave of innovation in the space sector,” he said. “A prominent
development for the UK is the growth of small satellite technologies, which are
revolutionising the space industry by providing cost-effective and accessible
satellite services.”



Space tech fund achieves lift-off

Small and medium-sized enterprises (SMEs) in the UK are playing a role,
excelling in areas like satellite components, propulsion systems, and space data
analytics. According to the researchers, these niche technologies are enabling
SMEs to outpace larger firms, although there is a risk of these companies being
acquired by bigger integrators. “Most UK space SMEs operate outside traditional
aerospace hubs, decentralising the industry and fostering innovation across the
country,” Heath said. “This broader talent base is crucial for the long-term
competitiveness of the UK space industry.”
Investment in the UK space sector has improved, with venture capitalists and
corporate investors showing increasing interest, according to the researchers.
Major aerospace and defence companies such as Airbus and BAE Systems are
investing in space technologies, and government support remains strong through
initiatives like The UK Space Agency and Innovate UK grants. However, challenges
persist, including reliance on large upfront investments and cautious investors
wary of the sector’s long timelines to profitability.
Heath shared that he sees several themes shaping the sector in 2025, including
investment in space infrastructure for national security, market consolidation
due to the fragmented nature of the industry, and technological innovations
lowering entry barriers. “Over the next 24 months, we will see a variety of
themes driving activity in the UK space sector,” he said. “It is exciting to see
the UK position itself to become a leading force in the global space economy.”
However, Heath cautioned that the space sector remains a cash-intensive industry
with profitability years away for many companies. “2025 will be an interesting
year for the UK space sector as interest from venture capitalists and corporate
investors continues to grow.”


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