Sunak Might Cut UK Space Spending, Analysts Say

28th Oct 2022
Sunak Might Cut UK Space Spending, Analysts Say

The space industry may not benefit from the newly appointed Prime Minister of the UK at least for now, according to a space analyst company. Seradata, which is also a satellite tracking business, claims that Rishi Sunak’s likely plans to cut defence spending will dip into the space industry too.

After the dramatic downfall of the short-lived Liz Truss reign, conservative leader Sunak is stepping into an increasingly economically unstable UK. Liz’s ‘Trussenomics’ strategy to cut taxes for the rich and fund it by borrowing money threw a major spanner into the economy. A massive rise in inflation, the housing market, and the crash of the Pound was the aftermath of Truss’s plans. But as the new PM steps into his role of stabilizing the UK economy, what will this mean for the space industry?

Expected cuts to space

While the new PM has expressed his love for space-related pop culture in the past, like his Coca-Cola bottle shaped like a Star Wars grenade, it may not be enough for him to maintain funding. Seradata said in its analysis: “The near-term portents for the UK space industry are not so good.  Even before the Truss mistakes, the government’s finances were already in parlous state after the Johnson “spend now pay later” regime (despite Sunak’s best efforts to reign him in). The government’s finances were further terribly battered by the Covid-19 pandemic.

“The Truss tax cuts have now been reversed, initially by the newly appointed Chancellor Jeremy Hunt (Update: he will be continuing as Chancellor in Sunak’s government), and spending cuts are now also likely.  Only a few key parts of the budget are likely to remain untouched – most noticeably the NHS and its related social care offshoot which could soon collapse unless something is done.  Nevertheless, virtually all other government departments are now likely to suffer cutbacks to get the government’s finances back on an even keel.”

No longer a sheltered space

Sunak has been opposed to increased defence spending for a while now. In 2020, when Sunak had begun his role as Chancellor of the Exchequer under Boris Johnson’s lead, the former PM committed to a four-year surge of defence spending, of up to £16.5 billion. The pledge of defence spending was the largest since Margaret Thatcher. Truss then committed to an increase of defence spending up to 3% by the end of the decade during her campaign, to which Sunak did not agree, even amid the war between Russia and Ukraine. This has sparked fears that Sunak will feel the same about spending on space as the new PM.

“Until recently Space had been thought to be a likely beneficiary of previously promised increased defence spending given that space is likely to become a key battleground in future wars. But this will no longer be the case,” Seradata said in its analysis. “Meanwhile, even though the civilian side of the space industry is thought be one of the better parts of British economy in terms of growth potential and earning power, even this is threatened with having its direct government funding cut – at least for the time being – including its contribution to the European Space Agency (ESA).”

While the UK’s space spending is relatively small compared to other nations, the nation is gearing up for increased commercial activity in the sector, such as Virgin Orbit’s launch later this year. This is thought to open the UK up to the world as a sovereign launch nation. However, despite space’s popularity, Seradata says that “no part of government spending is safe from cuts”.

What would cuts by Sunak mean?

In January 2020, Boris Johnson officially withdrew the UK from the European Union, which inevitably impacted the nation’s space industry. While the UK is still somewhat a part of the European Space Agency, it has had to take things into its own hands. The UK still has access to the Copernicus, the EU’s Earth Observation program, and the EU Space Surveillance and Tracking (EUSST) program, but Brexit shut the UK out of the Galileo and European Geostationary Navigation Overlay Service (EGNOS). Despite this, Boris Johnson was passionate about space and backed many civilian efforts, and with the proposed increase in defence spending, space was supposed to be a beneficiary.

However, under the new minister, Seradata believes cuts will impact the UK’s contribution to its ESA science budget and potentially the telecommunications programs. Further, less could be spent on STEM programs that would fuel increased skills amid major gaps. In 2021, when the National Space Strategy was released, the UK government outlined plans to bolster the space industry with an additional £1.4 billion in developing new capabilities, above the £5 billion to enhance satellite technology. While it is not confirmed by the new PM, these projections may be on hold – or delayed – while the UK gets back on its feet.

Nonetheless, Seradata hopes the “dire” outlook is just temporary if Sunak can slowly stabilize the economy. “As the growth and revenue situation improves, even more, increased spending in certain important growth inducing high tech areas – such as space – could soon be made again. A virtuous circle you could say.”

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