Brexit uncertainty worries UK space start-ups

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LONDON — The United Kingdom’s space start-up sector is blossoming. The U.K. government has committed to capturing 10 percent of the global space market by 2030 and is pouring support into emerging enterprises including spaceports, small satellite makers and application developers. However, the continuing uncertainty around Brexit concerns companies.

At the U.K. Space Conference in Manchester May 30-June 1, several companies announced bold new plans for constellations of small satellites, as well as successes with innovative satellite platforms.

At that time, the U.K. was bracing for a June 8 election that was meant to strengthen the position of U.K. Prime Minister Theresa May as she pushes for the so-called hard Brexit — a withdrawal not only from the European Union but also from the European Single Market with its tariff-free trade and free movement of people.

Earlier surveys suggested that hard Brexit is something most technology companies, those in space included, would prefer to avoid.

May won the election but lost her parliamentary majority and the option of some form of softer Brexit — the U.K. quitting the EU but staying part of the single market — is once again on the table.

However, U.K. space companies say that the continuing uncertainty and lack of clarity regarding the country’s future direction is causing damage.

“As an SME [small and medium enterprise] with transactions mainly in [U.S. dollars] and [euros], Brexit has actually been somewhat beneficial to our business thanks to the fall in the pound,” said Andrew Paliwoda, business development manager at Alba Orbital, a Glasgow-based start-up that is developing the Unicorn cubesat platform which, at 5x5x10 centimeters, will be smaller than standard cubesats.

“In the medium to long term, [Brexit] has the potential to be disastrous for emerging players,” he added, naming reliance on skilled workforce from the EU and easy access to market, as well as resources such as the EU Horizon 2020 research and innovation program, as major concerns.

“Freedom of movement and the single market are strategically important to our company,” said Paliwoda. “Brexit will clip our wings and make us less competitive on the international market unless measures are taken for a ‘soft Brexit.’”

Alba Orbital was one of two U.K. start-ups that signed contracts with the European Space Agency (ESA) at the U.K. Space Conference to fly demonstration payloads to prove their technology. The second start-up awarded an ESA contract was Harwell-based Open Cosmos, funded two years ago by Spanish engineer and entrepreneur Rafel Jorda Siquier.

Mallorca-born Siquier came to the U.K. with the single purpose to start a company, which today builds nanosatellites and provides a complete package of services for its customers that includes making launch arrangements, as well as operating the satellites for their clients.

“I founded the company in the U.K. because the environment is perfect, very supportive,” Siquier said. “I was able to incorporate my company within 24 hours, paying a 50-pound fee online. I am not aware how this will change after Brexit but there are uncertainties around visas, conditions for employees coming from the EU, export relationships with the EU, etc.”

Open Cosmos is one of about 60 companies that have been incubated at ESA’s Business Incubation Centre in Harwell since it opened its doors six years ago.

The incubator, which helps 10 companies a year develop their technology and business case, is one of the most successful ESA incubators, according to ESA liaison officer Alan Brunstrom.

While Brunstrom says that nothing will change for U.K. start-ups when it comes to accessing ESA support and opportunities because the agency is independent of the EU, he admits that the fledgling companies will likely face extra hurdles once the U.K. departs from the European block.

“The uncertainty is the problem,” Brunstrom said. “We don’t know if there will be problems with import-export tariffs or not. The immediate problem is the uncertainty about the residency status and right to work (in the U.K.) of EU personnel, who may leave (if already here) or be unwilling or unable to take up jobs here. This affects all high-tech industries and academia.”

Brexit might be not the only problem facing U.K. space start-ups. While generally praising the support by the U.K. government and the Glasgow City Council, Paliwoda admitted Alba Orbital might consider registering its spacecraft elsewhere as licensing rules don’t suit the needs of nanosatellite operators and the situation is changing only slowly.

“The laws have been created for much larger satellites and have yet to catch up,” said Paliwoda. “Things are changing on this front, but it’s very slow and it’s likely our satellites will be registered in another country which is more agile and adaptive to the needs of new space.”