Ensuring Market Resilience for European Space in the Wake of the Pandemic
The COVID-19 pandemic impacted the global economy on a massive scale, costing a combined estimate of between $16- $35USD trillion by the year 2025. With the majority of the world’s major economies going in to a recession during this time, the hit to many industries was unprecedented.
However, in the face of this financial turmoil, the space industry is fairing remarkably well. Research has shown that ‘there was almost no correlation between the global economy and the space industry’, and interest in investment for start-ups is still growing despite the wider socio-economic landscape.
Luck or logic?
The space sector did not just get lucky in withstanding the economic impacts of the pandemic. One main factor which enables the space sector, especially in Europe, to maintain a strong fiscal position is the presence of federal funding. According to a report by the Organisation for Economic Co-operation and Development (OECD),
“governments provide the backbone of space funding. [They] invest in space capabilities to support broad socio-economic objectives and the development of scientific capabilities, for both R&D and operations.”
This institutional ‘backbone’ in funding provides the industry with incredible opportunities for growth. This year, the European Commission announced the budget for the new Space Programme, with a record-breaking €14.88 billion being allocated to Europe’s space activities. Furthermore, the European Investment Fund (IEF) partnered with the EU Commission and announced €300 million of investment for the European space sector.
As well as traditional streams of investment coming from government, the European space sector is seeing an increase of private investments. This is firstly through means of venture capital enabled by the NewSpace market, but also through new partnerships between agencies and private companies. A key example of this is the joint venture between the European Space Agency and ArianeGroup, who together are developing the Ariane 6 launcher.
The space sector is fortunate to be positioned within a non-isolated market, in that is provides services for a number of sectors; communication, navigation, healthcare, industrial development and many, many more. This ubiquity is crucial for sustaining innovation and growth within the sector, as it provides numerous opportunities for development.
Although the outlook is largely positive, it is important to maintain a strategic approach in preserving European space’s position in the global market beyond the pandemic, particularly in commercial activities. Implementing sustainable procurement instruments, continuing investment in innovation and R&D, and creating predictable regulatory frameworks will be paramount in embedding market resilience for Europe’s future space activities.
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