Will UK-based Companies like Orbex Space be Forced to Adjust After Brexit?

Brexit has affected numerous businesses in the UK, and with COVID interfering in many economic aspects, including trade and travel, it is no wonder the British economy is going through some challenges. Still, despite some separation issues, certain industries — space, in particular — remain more or less intact. Relations between the UK Space Agency (UKSA) and ESA seem as close as always were. But is it truly so, and does it mean that Brexit will not affect British space at all? Many aerospace companies, including Orbex Space, with its current struggles, would disagree — and for a good reason. 

In Theory, Space Regulations Remain Unchanged

Even though the UK has had its own space agency since 2010, the country is still an ESA member. Despite its name, the European Space Agency is not a purely European association, and its inclusion policies span farther than the European Union alone. Canada is an equal ESA member, even though the country is neither in the EU nor in Europe. So, the post-Brexit UK is not the only ESA country outside the EU legal framework. So, technically, space relations between the UK and ESA are not at all affected by Brexit. 

In Practice, Things are Already Different

Theory and reality do not always go hand in hand, and the actual relations between the UK and European space agencies are already different. Even though the UK keeps pumping £300 million a year into ESA projects, the country has lost access to some of those initiatives. Galileo is an obvious example, as, despite its annual investments, the UK has no part in future developments of European satellite navigation projects. 

British aerospace companies have also been affected by Brexit, even though the regulations did not change. As a reminder, over 200 British space companies filed to stay under the EU regulation, and three Prime Ministers in a row have been working hard to secure this deal for local businesses. However, the deal was struck only by the end of 2020, and the period of uncertainty took its toll on several major enterprises. 

Between 2017 and 2020, CGI UK lost a major Galileo contract to European providers. The $290 million that could have been CGI’s went to Spanish company GMV instead. 

Surrey Satellite Technology Ltd (SSTL), another British company actively invested in Galileo, had to move some of its operations to Europe to continue working on an already signed contract. The company already provided 22 payloads with a German firm OHB System and has to deliver 12 more by the end of the year. 

While some regulations have already been set straight, a few vital questions are still standing. Export permission is one of them, and export fees may seriously affect several UK-based enterprises, including Orbex Space. Orbex has offices in Denmark, Germany, and the UK and is seriously interested in launching from Sutherland Space Hub. But given that the company’s manufacturing facilities are located in Denmark, moving rocket parts to the UK might be pricier than Orbex would have hoped. So, Orbex Space already announced a plan B — a launch site in the Azores. 

If Orbex Space decides to launch from the Azores, the UKSA will be in a bit of a pickle. The agency has already invested several million into Orbex Space that was determined to launch from Sutherland, a vertical launch site. Now, this investment may prove unjustified. Unless, of course, the UK and EU figure out a way to build healthier, mutually beneficial jurisdictions, especially when it comes to export and import. 

Takeaway 

Though globally affecting many areas, Brexit shouldn’t considerably change the flow of space activities. For starters, the UK remains an equal ESA participant, investing considerable sums into its missions. And, while access to some ESA projects, like Galileo, has been lost, both the EU and UK have managed to remain friends after their breakup. 

Even though the period of uncertainty affected some British companies, the UK and EU are figuring out new collaboration opportunities and healthy jurisdictions. While some British companies, Orbex Space included, may look for a way to lead a double life between two jurisdictions, there is hope that a mutually beneficial legal framework should soon be established.

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