The Ministry of Defence (MOD) has made a series of announcements this month which signify the increasing importance of space to the UK’s defence strategy. Space was formally recognised as a distinct military domain alongside land, sea, air and cyber in 2021, and the recent announcements are the next step in the UK’s commitment to building capability in this domain in a time of increasing geopolitical instability.
Key takeaways
The announcements (which are summarised below) underline the government’s intention to place space at the heart of its defence, security and economic growth agenda, with dedicated investment funding to support this growth. The key takeaways for industry are:
Space is becoming a long-term defence priority. Industry should expect sustained government investment in space capabilities, with defence, national security and economic growth increasingly driving requirements and procurement activity.
Opportunities will extend beyond traditional space companies. The government's priorities create opportunities for organisations operating in adjacent sectors, including communications, cyber security, AI, data analytics, advanced manufacturing, robotics and electronic warfare.
Innovation and rapid capability delivery will be critical. The emphasis on novel technologies, operational advantage and pace of delivery is likely to favour organisations that can demonstrate agility, technological differentiation and a clear route from innovation to deployment.
Collaboration will remain central to market access. The UK Space Strategy places significant emphasis on partnerships across government, industry, academia and international allies, creating opportunities for joint ventures, consortium bids and supply chain partnerships.
Regulatory reform will seek to reduce barriers to entry. Planned changes to the UK's regulatory framework could make it easier for organisations to enter the space market and bring new products and services to market more quickly.
A new UK space strategy
The most significant development was the publication of the government's new UK Space Strategy, which is backed by £7.8 billion of funding until 2030. The strategy “provides a one government framework for securing the UK’s interests and driving growth through space by putting defence, national security and economic growth at the centre of the UK’s approach” and sets out the government’s vision for how the UK can become a competitive force in the space industry.
The strategy highlights two key strands to achieving its objectives:
Building on the “sector-wide foundations” of UK’s existing space industry.
“Advancing subsectors of space.”
To “build on sector-wide foundations”, the government plans to carry out the following:
Industrialisation of the space eco-system by:
Creating regional space clusters to provide commercial opportunities and regional economic growth.
Creating a more commercially mature, efficient and scalable space industry.
Developing and diversifying the UK space workforce with a clear talent pipeline.
The government has made a number of funding commitments to support these ambitions, including:
UK MOD capability funding in novel technologies, which includes spending of £420 million to deliver innovative capability at pace.
National Space Innovation Programme with £65 million of funding for projects.
Space Clusters Infrastructure Fund of £37 million for research & development and test infrastructure across UK regions.
Education and Future Workforce Programme with £14 million of funding.
Building partnerships, multilateral leadership, shaping rules by collaborating with other nations and international alliances including NATO and the European Space Agency. These partnerships are seen as critical to the UK’s security and trade and help ensure it can influence and shape rules and regulations relating to space.
Pro-Growth UK Regulation by reforming regulations to ensure that the UK keeps pace with the rapidly evolving space sector and to increase speed and ease of access for businesses and individuals to the space sector by reducing or removing barriers.
Strengthening security, sustainability and resilience by investing in and developing technology and capabilities to enhance the UK’s ability to monitor, respond to and deter threats to national security.
Key areas for “advancing subsectors of space” are:
Space domain awareness
In-orbit servicing, assembly and manufacturing
Satellite communications
Assured access to space
Building resilient positioning, navigation and timing
Using Earth observation for security and growth
Space discovery
UK's first dedicated space defence squadron
The RAF launched the UK's first military unit dedicated to disrupting, degrading and denying threats in space, No. III Space Effects Squadron. The squadron will be responsible for:
Protecting critical UK satellite infrastructure.
Countering hostile activity directed at British space assets.
Supporting both defensive and offensive space operations.
Employing advanced technologies, including electronic warfare capabilities.
Space as a core element of deterrence
The defence secretary, Wes Streeting, gave the keynote speech at the UK Space Power Conference on 23 September 2026, in which he discussed the need to place “defence and deterrence at the heart of our approach”.
Key points included:
The growing strategic importance of space: As the threats facing the UK evolve and increase, control of space will become as important to 21st-century security as control of the seas and skies was in previous centuries.
The critical role of space in UK defence: With satellites supporting communications, intelligence gathering, navigation and missile warning, and the loss of these critical assets potentially having serious consequences for both the UK’s economy and everyday life.
Continued government investment in UK space capabilities: Including £3 billion committed through the Defence Investment Plan over its initial four years, the launch of No. III Space Effects Squadron and the launch of the UK Space Strategy.
The importance of international cooperation: With the UK’s allies and NATO continuing to play a key role in strengthening space security and defence.
Greater innovation and collaboration with industry: To maintain the UK's technological and operational advantage while supporting wider economic growth in the UK.
Responsible and sustainable development: Recognising the need to adapt and innovate at rapid pace, while continuing to do so “responsibly and consistent with the UK’s commitment to a safe, secure and sustainable space domain”.
What does this mean for businesses, particularly SMEs?
With an increasing emphasis on resilience, deterrence, innovation and international collaboration, space is becoming an essential enabler of the UK’s military and national security objectives.
For SMEs, this presents a significant opportunity. Increased investment in innovation, regional space clusters and emerging technologies is likely to create new routes to market for specialist suppliers. While it is not yet clear how these opportunities will appear, the practical route to market is likely to be through a combination of direct government procurement, innovation programmes, framework arrangements, collaborative research initiatives and supply-chain opportunities with existing prime contractors.
SMEs with expertise in areas such as satellite technology, communications, cyber security, AI, data analytics and advanced manufacturing are particularly well placed to support future defence and civil space programmes. Many of the technologies prioritised by the strategy are dual use in nature, meaning that organisations developing capabilities in these areas may find themselves increasingly participating in space programmes, even where space has not historically been a core market.
As the government seeks to build a more mature, diverse and scalable space ecosystem, SMEs have an opportunity to play a central role in delivering the UK’s long-term space ambitions and strengthening sovereign capability across the sector. However, the question for industry including SMEs is no longer whether the UK is serious about space: the question is whether organisations are positioned to participate. For many businesses, the opportunity may not come from becoming a space company, but from understanding how existing capabilities can support an increasingly space-enabled defence and security ecosystem.
To discuss any of the points raised in this article, please contact Carla Parsons.
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