This is the second of what will probably be three posts on the consequences of Brexit on the UK Space Sector. The first post served as a general introduction to the UK space sector and Britain’s membership of the European Space Agency. Britain’s ESA membership should be largely unaffected, it will be on the EU side of the European space cooperation coin that the greatest effects are felt. Part of the problem is caused by the fact that still, eight months after the Brexit vote, it is not clear what Brexit will actually mean. Once negotiations actually start I suspect (hope) that it will become easier to judge the impact. The third post in this series will focus more on this issue, and of course any further development later will provide an opportunity to revisit.
It’ll be on the EU side that the real impact on the UK space industry is felt. The UK Space Agency in 2015 highlighted the importance of Europe for the UK’s space ambitions, saying that “the target of a £40 billion UK space industry by 2030 will be achieved by identifying and developing new high growth markets, pursuing initiatives to substantially grow exports and working to increase the UK’s returns from Europe.”[1] Europe is the largest market for the UK space industry (and given the size and scope of the European Union, Europe does effectively equal the EU) and the second fastest growing, this is particularly important as the United States is effectively closed to foreign companies unless they open facilities in the US as Airbus and Surrey Satellites among others have done. This makes access to the European marketplace vital to the achievement of Innovation and Growth Strategy targets (detail of which can be found in the first post or directly from the IGS itself).[2]
The biggest potential loss is regarding the Galileo and Copernicus programmes. These are two satellite constellations funded by the European Union which will provide the EU with its own global navigation and earth observation system. Loss of access to Galileo and Copernicus could put IGS goals at risk. This is in part because due to Brexit, future contracts for Galileo and Copernicus satellites may be at risk. There are still eight satellites left to be contracted for and then next generation replacement satellites down the line. UK manufacturers, particularly Surrey Satellites were among the frontrunners for these contracts but there is now growing pressure to award them to companies located in Member States remaining within the EU.[3]
The other perhaps greater loss is the perspective economic benefits that could come from access to these systems, Galileo specifically. As previously mentioned, broadcasting dominates the UK space industry, however it is recognized that the growth needed to reach IGS targets needs to come from non-broadcasting sources as that market is essentially fully mature and has little to no further growth potential. Indeed, satellite navigation is expected to play significant role in hitting IGS targets. Navigation is already a growing sector and now generates 8% of total turnover of the UK space industry.[4] EU global positioning systems “are forecasted to provide benefits to UK governments, businesses, and consumers in the order of £6.2 billion to £9.3 billion over 20 years…”[5]
The Public Regulated Service is a key product of Galileo; it will provide the most accurate data which is inaccessible on the other global navigation systems.[6] Galileo would offer the UK its first PRS encrypted positioning capability.[7] This is now at risk. It is available to all EU Member States; the UK will most likely lose automatic entitlement upon Brexit. That said it may be possible for the UK to negotiate access as PRS access can theoretically be given to non-EU states but access will have to be negotiated and no idea as to potential cost.[8]
However, Galileo and Copernicus are not the only issues. The UK space industry reports that access to capital is a significant barrier to growth[9] and Brexit, particularly a ‘hard’ Brexit could mean it becomes more difficult, if not impossible to access to European capital markets and could see shrinkage of the existing UK capital market.
Furthermore, space industry leaders have warned about the loss of research and development funds, Horizon 2020 in particular (and while the government has tentatively pledged to maintain this funding nothing has been said about successor programmes.) The European Union is a significant supplier of research and development funding[10] and the space sector is particularly research and development heavy.[11] There is also the support provided to university researchers by European Union research funds and university budgets more generally by the tuition provided by European Union students. Furthermore as the Civil Space Strategy recognizes “a strong research community provides a technical and scientific knowledge base that feeds future developments.” And “investment in sciences also ensures the UK has a strong academic base able to supply industry with skilled graduates and experienced researchers.”[12] The space industry will potentially be weakened both directly and indirectly by the loss of EU research and development funding.
Then there is freedom of movement. This helps meet skill needs both by allowing the UK space industry to bring in European space professionals to fill skill gaps, and indeed one third of UK space industry employees are from overseas, [13] but also allows UK space professionals to go and work in the wider European space industry to gain skills and experience, especially of the variety that may not be easily obtainable in the UK. As well as allowing British students to study at universities throughout the European Union where they are able to access opportunities they wouldn’t be able to get in the UK be it at the undergraduate, graduate or postgraduate level. This is important as the UK space industry will need 100,000 new skilled workers in order to meet the IGS targets.[14] It is increasingly looking as if the right to stay and work of even those EU nationals currently in the UK are under threat[15], which would be disastrous for the UK space sector.
Finally, space policy is another area affected. Following the Lisbon Treaty Article 189 TFEU[16] gives the EU competence to act in the field of space. As a result the EU has been taking an increasing role in the field of space policy.[17] One of the aims of the IGS was for the UK to work to influence the direction of EU space policy to be more beneficial to the UK space sector and UK national interests.[18] Particularly as “EU space programmes have real synergy with UK national interests”[19] Britain has taken a leading role in EU space policy debates, specifically with regards to space security and situational awareness. The UK government recognizes the role of EU space projects for defence purposes and that a “strong, integrated approach to security in European space policy and programmes can bring valuable return to the commercial space sector and ensure confidence in Europe’s space security.”[20] The UK can continue to lobby Brussels regardless of its post Brexit status, however, as a non-Member State the UK will have considerably less influence on EU space policy and will of course have no vote on the issue.
Other than the impact the potential loss of EU workers currently working in the UK space sector Brexit won’t have a massive immediate effect, especially as the government has pledged to replace Horizon 2020 funding and the like at least for the immediate future.[21] The biggest impact will be on future potential. The potential of both Galileo and Copernicus was what the IGS rests a lot of its hope on, if the UK government fails to secure post Brexit PRS access then the IGS targets will become difficult if not impossible to achieve. In the next post, I, will discuss some of the potential options for the future, what the UK space sector and its supporters can do and try to determine whether or not the UK government has anything resembling a plan (I’ve not finished reading the Brexit white paper[22] just yet but it’s not looking promising…)
[1]UK Space Agency, Satellite Applications Catapult, Innovate UK et al (2015) UK Space Innovation and Growth Strategy: 2015 Update Report, 5
[2]Peggy Hollinger (2016) ‘UK Space Sector Fears Brexit Will Hinder EU Contract Bids’, Financial Times, 14 August, Available at: https://www.ft.com/content/48e12b28-5e2d-11e6-bb77-a121aa8abd95 (accessed 10 September 2016); HM Government (2014) National Space Security Policy, 19
[3]Hollinger (2016) ‘UK Space Sector Fears Brexit Will Hinder EU Contract Bids’
[4] UK Space Agency (2014) The Size and Health of the UK Space Industry: Executive Summary, 10, 14
[5] London Economics (2015) The Case for Space 2015: The Impact of Space on the UK Economy, XV
[6]Hollinger (2016) ‘UK Space Sector Fears Brexit Will Hinder EU Contract Bids’
[7]Satellite Applications Catapult Ltd. (2015) Innovating for a Better World, Empowered by Satellites, 8
[8]Hollinger (2016) ‘UK Space Sector Fears Brexit Will Hinder EU Contract Bids’
[9]UKSA (2014) The Size and Health of the UK Space Industry, 11
[10]Hollinger (2016) ‘UK Space Sector Fears Brexit Will Hinder EU Contract Bids’; London Economics (2015) The Case for Space 2015, xvii
[11]London Economics (2015) The Case for Space 2015, iv
[12]UK Space Agency (2012) Civil Space Strategy 2012-2016, 14
[13]Hollinger (2016) ‘UK Space Sector Fears Brexit Will Hinder EU Contract Bids’
[14]UKSA et al (2015) UK Space Innovation and Growth Strategy, 10-11
[15]Daniel Bofferey (2017) ‘EU citizens living in the UK could face legal limbo after Brexit’ The Guardian, 18 February, Accessed at: https://www.theguardian.com/politics/2017/feb/18/eu-citizens-right-to-stay-britain-chaos (Accessed 20 February 2017); Alan Travis (2016) ‘Future of EU nationals in UK more uncertain after May comments’ The Guardian, 4 July, Accessed at: https://www.theguardian.com/uk-news/2016/jul/04/future-of-eu-nationals-in-uk-uncertain-may-comments-tory-leadership-brexit (Accessed 20 February 2017); ‘Why is Theresa May threatening Britain’s EU nationals over Brexit?’ (2016) The Spectator, 23 July, Accessed at: http://www.spectator.co.uk/2016/07/why-theresa-may-must-end-the-uncertainty-for-eu-nationals/ (Accessed 20 February 2017)
[16]Treaty on the Functioning of the European Union, Article 189
[17]UKSA (2012) Civil Space Strategy
[18]UKSA et al (2015) UK Space Innovation and Growth Strategy, 9; HMG (2014) National Space Security Policy, 13-19
[19]UKSA (2012) Civil Space Strategy, 6
[20]UKSA et al (2015) UK Space Innovation and Growth Strategy, 9; HMG (2014) National Space Security Policy, 13-19
[21]Jessica Elgot, Larry Elliott and Nicola Davis (2016) ‘Treasury to guarantee post-Brexit funding for EU-backed projects’ The Guardian, 13 August, Accessed at: https://www.theguardian.com/politics/2016/aug/13/philip-hammond-treasury-to-guarantee-post-brexit-funding-for-eu-backed-projects (Accessed 20 February 2017)
[22]Department for Exiting the European Union (2017) The United Kingdom’s Exit from and New Partnership with the European Union (Cm 9417). Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/589191/The_United_Kingdoms_exit_from_and_partnership_with_the_EU_Web.pdf (Accessed: 6/2/17).