UK space sector earnings now at £7.5bn

The UK is about to launch Europe's first satellite dedicated to the delivery of broadband services

UK space companies have defied the recession, growing by an average of 10% a year from 2007.

So says a report from the Oxford Economics consultancy, which predicts the growth will continue in 2010.

The space business is now said to have a turnover worth some £7.5bn, with employment rising at about 15% a year.

The best performing areas are in so-called downstream activities - services such as satellite broadcasting and telecommunications.

But even the upstream sector - such as satellite manufacturing - recorded a very healthy performance, averaging annual growth of 3% over the period 2006/07 to 2008/09.

The latest "Size and Health" report was commissioned by the UK Space Agency and is based on a survey of the activities of 260 leading companies.

"We had good anecdotal evidence through the recession that we were doing well but now we have the hard numbers; and it's very positive," said Richard Peckham from EADS Astrium and chair of UK Space, an umbrella group representing the industry.

And as if to emphasise the point on Monday, London-based satellite communications operator Inmarsat announced an 18.4% rise in its third-quarter earnings. The company is the world's biggest provider of comms on the move.

"Satellites go where terrestrial services don't, and what we're doing now with satellites is providing broadband - or internet access - or e-mail coverage in remote environments," CEO Andrew Sukawaty said.

"And because we're extending this service to an under-served market, we're now in a position to expand even in the middle of a recession."

The space sector recently set out a 20-year vision for itself called the Space Innovation and Growth Strategy (S-IGS).

It identified what it thought were the emerging market trends and the approaches that needed to be adopted to exploit them.

It covered areas as diverse as space tourism and the delivery of broadband internet by satellite.

The vision called on industry to intensify its R&D spending, but also for government to increase its investment.

If that happened, the S-IGS said, the UK space sector could create up to 100,000 new UK jobs in space-related activity and grow revenues to £40bn a year.

Mr Peckham said the government could help underpin the success story.

The space sector is currently championing the potential of a privately financed, national Earth-observation (EO) service to acquire imagery for the MoD and other government departments, while selling other data on the open market.

The satellites would be built and operated by the private sector, but to stand a chance of success the project would need a long-term commitment from the government to purchase its products.

"Government has a huge influence through procurement; it's what they buy," Mr Peckham told BBC News.

"We think one of the biggest markets going forward is Earth observation. We're not asking for hundreds of millions of pounds from government, but if they will just aggregate all their requirements then we can build something and go and export it."

Other examples of smart government investments include the Hylas-1 spacecraft. Due to launch on 25 November, it will become Europe's first broadband dedicated satellite, providing internet connections to rural areas poorly served by terrestrial technology.

Hylas will be operated by start-up Avanti Communications, but the spacecraft's core technology came out of a European Space Agency R&D programme funded by the British government.

A close look at the figures published by Oxford Economics reveals they are dominated by a few large companies, and by the earnings of the satellite TV provider BSkyB in particular.

In fact, broadcast services accounted for 68% of UK space sector turnover in 2008/2009.

Asked whether this distorted the general picture somewhat, science minister David Willetts responded: "It is true that the downstream revenues are shaped by BSkyB - at the moment. But one of the strengths of this sector is that we have a really good mix of some big companies and a lot of SMEs.

"We can expect this sector to grow and diversify," he told BBC News.

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