Our collaborator Sam Ravi represented Challenger at the International Astronautical Congress (IAC) 2025 in Sydney.

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Photo Credit: The Oxford Magazine (2020)

The UK’s Risk-Off Problem

The merging of the UK Space Agency with Department for Science Innovation Technology (DSIT) is another sign the UK government wants to avoid risk at all costs. Sectors receiving substantial funding including AI and defence have begun to gravitate more to large US tech companies that the government can be assured carry less risk of costing more than they generate. Yet, deferring risks also defers reward. The UK provides the talent, and the US innovators reap the rewards, stymieing the UK’s competitiveness in a world teeming with technological transformations. AI, drones, quantum, eVTOLs, and indeed space are all at an inflection point, and in all cases the UK government seems content for its institutions and companies to fall behind, so long as the risks are low.

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The decision to scrap the UK Space Agency and fold it into DSIT may save on bureaucracy, but experts warn it risks doing long-term damage to one of Britain’s most successful high-tech sectors. The agency has been central to the UK’s £18.6bn space industry, helping to develop small satellite launch capabilities, foster research partnerships, and raise the country’s international profile. Dismantling it undermines the very focus and agility it was created to provide, replacing a dynamic, outward-facing body with slower, more bureaucratic Whitehall structures. At a time when other nations like Japan and Germany are strengthening their space agencies, the UK risks drifting backwards just as global competition intensifies. Rather than cut programs, France’s space agency, CNES, is expanding its defence-related capabilities to meet the challenges posed by Russia (see our Strategic Review: The Space Launch Sector).

Spin vs. Reality

It is of course being spun as a positive. Dr Paul Bate, CEO of the UK Space Agency, made a statement following the news:

“I strongly welcome this improved approach to achieving the government’s space ambitions. Having a single unit with a golden thread through strategy, policy and delivery will make it faster and easier to translate the nation’s space goals into reality.
We will continue to deliver, while reducing duplication and ensuring we work even more closely with ministers to support the UK space sector, and the country.”

Yet, this move undoubtedly reflects a cost-cutting measure aimed at advancing Labour’s broader ambition to reduce expenditure in areas it considers less essential. The UK Space Agency is not the only body affected by this approach.

In January 2025, Labour folded the Central Digital and Data Office into the Government Digital Service and shifted GDS into the Department for Science, Innovation and Technology, stripping both of their independence. What looks like tidying up bureaucracy in fact weakens the UK’s digital backbone: without a central authority to enforce standards, departments risk sliding back into siloed systems, slowing AI adoption, procurement reform and open data. Other countries, from Denmark to Singapore, are empowering standalone digital agencies as growth engines, while Britain risks turning a driver of innovation and startup spillovers into just another Whitehall policy unit.

Who Really Wins? The US Giants

So, who is thriving in the UK? Largely US giants and global innovation leaders. Companies like Nvidia, Palantir, Anduril and Archer Aviation are increasingly the ones driving UK innovation. Anduril, for example, has partnered with eVTOL startup Archer Aviation - whose aircraft will showcase at the 2028 LA Olympics - on a military programme in Britain, while also manufacturing drones in the UK for deployment to Ukraine. Nvidia and Palantir hardly need an introduction: both have poured major investment into the UK to tap its world-class AI talent, cultivated by universities that rank among the best globally. In space, the government has folded Rocket Lab, a US/New Zealand company, into its £1 billion Hypersonic Technologies and Capability Development Framework. The funding exists, but it is directed toward safe bets that minimise risk rather than building domestic capability.

Labour’s backing of companies like Palantir and Anduril reflects a preference for safe bets - large US giants that pose no risk of insolvency - rather than nurturing smaller domestic startups. If Labour’s risk-off policy continues, favouring only the biggest winners, the UK risks becoming little more than a testing ground for American technology. In truth, Britain’s place in the global tech race hangs not on government strategy, but on the calibre of its talent and the depth of its ties to the US.

Vertical Aerospace: Britain’s Risk Aversion in One Story

Photo Credit: Vertical Aerospace (2025)

The best case for the desire for growth hitting the risk aversion roadblock is Vertical Aerospace. Electric vertical take-off and landing (eVTOL) aircraft development are part of an urban air mobility revolution that Morgan Stanley calculates could be worth $9 trillion by 2050. Based in Bristol, Vertical Aerospace was one of the survivors after years of brutal collapses throughout the eVTOL startup space. Vertical Aerospace was dropped for Joby Aviation- another US company - at the end of 2024 by Virgin Atlantic. Virgin would have liked to support a UK company, but knew if it came down to the wire, the US government would (and did) back Joby, but the UK would not sufficiently support Vertical Aerospace.

Vertical Aerospace has had only piecemeal government support - around £37m in one-off grants - while rivals abroad benefit from full industrial strategies, like the US Agility Prime program that supports all eVTOL and autonomous vehicle startups. Joby and Archer’s first aircraft were paid for by the U.S. DoD. Ironically, Vertical continues to make progress because it has begun to be backed by US investors like Scott Galloway, who, unlike the UK government, see the serious asymmetric upside potential in the company and is willing to take the risk.

Risk Aversion in Health and Life Sciences

It appears that if the UK government is required to put up some of the risks, they will make remarkably foolish decisions. On 31 January 2025, AstraZeneca scrapped its planned £450m vaccine plant in Speke after Labour scaled back a £65m state aid offer made by Jeremy Hunt. While a 14% subsidy was in line with international norms, Labour’s decision to revisit the pledge undermines its rhetoric on growth and private investment. The collapse is seen as a serious blow to Labour’s credibility on creating a stable business climate, even if some argue AstraZeneca could easily afford the gap itself.

This was not the only medical disaster this year. The UK government axed £15.5m in funding for AI auto-contouring in radiotherapy, a technology that slashes treatment planning times and cuts waiting lists. Cancer experts warn the move could add up to 500,000 extra days of delays, worsen staff shortages and even cost lives. NHS trusts that had already begun rolling out the tool now face a £300,000 shortfall each, prompting accusations that ministers are “going back to analogue cancer care” despite pledges to champion AI in the NHS.

The Alan Turing Institute, the UK’s flagship AI research centre, is facing turmoil as staff warn it could collapse amid government pressure to pivot towards defence and security. A whistleblower complaint raised concerns over governance, culture, and the risk of losing £100m in funding, while around 10% of staff face redundancy as projects on housing, health inequality and online safety are shut down. Technology secretary Peter Kyle has demanded a sharper focus on defence, hinting at leadership changes, fuelling fears that the UK’s international standing in AI research could be weakened.

Conclusion: The Price of Playing it Safe

The UK’s approach to technology and innovation has become defined by caution. By dismantling independent institutions, retreating from bold bets, and funnelling resources toward foreign giants, the government is not just avoiding risk - it is outsourcing the future. The Space Agency merger, the sidelining of Vertical Aerospace, the retreat from AstraZeneca, and the gutting of digital and AI initiatives all point to the same pattern: a willingness to trade long-term competitiveness for short-term political safety.

Other nations are doubling down on their domestic capabilities, embracing the uncertainty that comes with genuine innovation. Britain, meanwhile, is positioning itself as a low-risk partner to American firms, offering world-class talent without the structures to capture the rewards.

The irony is that the UK does not lack the ingredients to lead - it has the talent, the research base, the startups, and the global credibility. What it lacks is the political will to accept that risk and reward are inseparable. By prioritising safe bets over bold ambitions, Labour risks turning Britain from a builder of breakthroughs into little more than a staging ground for someone else’s success.

If the UK continues down this path, the question will not be whether Britain can compete in AI, space, and life sciences, but whether it chooses to compete at all.

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References

BBC News (2025) UK independent space agency scrapped to cut costs. BBC, 13 August. Available at: https://www.bbc.co.uk/news/articles/c49mgjm8z47jo (Accessed: 20 August 2025).

Bawden, A. (2025) ‘Ridiculous’ cuts to AI cancer tech funding in England could cost lives, experts warn. The Guardian, 31 March. Available at: https://www.theguardian.com/politics/2025/mar/31/ridiculous-cuts-to-ai-cancer-tech-funding-in-england-could-cost-lives-experts-warn (Accessed: 20 August 2025).

Ghosh, P. (2025) ‘Shut it down and start again’: staff disquiet as Alan Turing Institute faces identity crisis. The Guardian, 18 August. Available at: https://www.theguardian.com/technology/2025/aug/18/shut-it-down-and-start-again-staff-disquiet-as-alan-turing-institute-faces-identity-crisis (Accessed: 20 August 2025).

Hathway, C. (2025) UK Space Agency to merge with DSIT. Comms Business, 20 August. Available at: https://www.commsbusiness.co.uk/content/news/uk-space-agency-to-merge-with-dsit/ (Accessed: 20 August 2025).

Head, E. (2021) Morgan Stanley shifts its timeline but stays bullish on eVTOL market. Vertical Mag, 8 May. Available at: https://verticalmag.com/news/morgan-stanley-shifts-timeline-stays-bullish-evtol-urban-air-mobility (Accessed: 20 August 2025).

Jolly, J. (2025) AstraZeneca cancels £450m Liverpool investment, blaming UK government funding cuts – as it happened. The Guardian, 31 January. Available at: https://www.theguardian.com/business/live/2025/jan/31/canada-mexico-donald-trump-tariffs-saturday-uk-house-prices-inflation-ftse-100-federal-reserve-business-live-news (Accessed: 20 August 2025).

Stonor, C. (2024) Vertical Aerospace “Turning Fortunes Around”: UK Government Backs eVTOL Company. eVTOL Insights, 21 February. Available at: https://evtolinsights.com/2024/02/vertical-aerospace-turning-fortunes-around-uk-government-backs-evtol-company (Accessed: 20 August 2025).

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We are proud to share our new strategic review of the space launch sector - a 103-page study that highlights both opportunities and risks the global space launch sector.

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What the report shows:

🌍 Industry Overview: The US leads, but its global dominance is eroding.
China’s Edge: Beijing already outclasses Europe in payload size and launch success — thanks to sustained government support and sharper policy focus.

🏢 Commercial Landscape: From SpaceX to Arianespace, ISRO to CASC, we map all the major players shaping the market.

⚠️ Security & Autonomy: Russia and China are challenging Western satellites and infrastructure. Europe’s continued fragmentation risks deepening dependence.

📈 Market Trends: India is a rising star, building credible capacity and international market share.

Forward Look: Unless Europe takes bold steps, its space sector risks becoming another AI, robotics, and eVTOLs story — European talent, American and Chinese profits.

It can be purchased here: https://www.challengerresearchgroup.com/product-page/strategic-review-the-space-launch-sector

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Left: Dominic Cummings and Boris Johnson. Photo Credit BBC News. Right: Photo Credit Eutelsat.

In the chaos of the COVID-19 pandemic Dominic Cummings and Boris Johnson pulled off a rescue mission that may define Europe’s defence future. In saving OneWeb, a Low Earth Orbit (LEO) satellite company, from bankruptcy in 2020, Cummings and Johnson may have inadvertently helped to save European defence autonomy. As seen during the Ukraine-Russia War, LEO satellites are now a vital part of modern warfare. LEO enabled aerial and naval drones have revolutionised warfare and European countries are realising that dependence on Elon Musk’s Starlink for these services is a strategic vulnerability.

After being rescued by the UK government, OneWeb continued to face serious cash flow issues and needed further investment to meet its deployment and coverage targets. In 2023, it merged with French satellite firm Eutelsat, creating the second largest LEO satellite operator after Starlink. More recently, French President Emmanuel Macron has recognised the company’s strategic importance to both French and European defence autonomy, calling it a “strategic treasure”. The French government recently led a €1.5 billion capital raise, injecting €717 million directly themselves, aiming to build a viable European alternative to Starlink – on which the West remains critically dependent. Macron has called it “madness” for France and its allies to depend on non-European LEO constellations and is backing Eutelsat as a European champion offering an alternative to Starlink. So, in an ironic twist OneWeb, originally rescued by Cummings and Johnson as a symbol of Brexit sovereignty, could emerge as a vital asset in European defence autonomy under French leadership.

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OneWeb’s Founding and Rescue

Founded in 2012 by former Google executive Greg Wyler and headquartered in London, OneWeb, originally called WorldVu, set out to build a constellation of LEO satellites to deliver affordable, high-speed internet to underserved and remote areas around the world. Around the same time, SpaceX’s Starlink was emerging with similar ambitions. In fact, Wyler and Elon Musk explored joining forces to launch a mega-constellation of satellites, and for a brief moment, OneWeb and Starlink could have been the same venture. But, by mid-2014, discussions ended without a formal partnership, and the two companies diverged, developing in parallel as direct competitors. Ironically, what began as a shared vision is now a transatlantic rivalry, shaping the future of global connectivity and defence autonomy.

The parallel development continued until the COVID-19 pandemic hit. On March 27^th, 2020, OneWeb filed for Chapter 11 bankruptcy in a New York court following failed funding efforts as key backers withdrew amid the financial turmoil triggered by the pandemic. Encouraged by Dominic Cummings, then UK Prime Minister Boris Johnson made the controversial decision to rescue the company. After Brexit, British firms were barred from the EU’s Galileo global navigation system, a rival to GPS, and OneWeb was pitched as a way for the UK to develop its own alternative. Cummings explicitly framed the purchase as a symbol of “Brexit freedom”, aiming to bolster the UK’s presence in the space sector and prevent the technology from falling into foreign hands – specifically China. In July 2020, the UK Government and Bharti Global announced a joint plan to save the company investing £500 million each. As part of the deal, the UK secured a golden share, giving it special rights and veto powers designed to protect national interests and maintain strategic control over OneWeb’s operations.

LEO Satellites

Low Earth Orbit (LEO) satellites are defined as those operating at altitudes of between 160 to 2,000 km and move rapidly across the sky, completing an orbit in roughly 90 to 120 minutes – hence the need for large constellations to ensure continuous global coverage. Their low altitude translates to lower latency and higher data transfer speeds when compared to Medium Earth Orbit (MEO) satellites which operate between 2,000 to 35,786 km and Geostationary Orbit (GEO) satellites which operate above 35,786 km. Average latency for LEO satellites ranges between 20 to 50 milliseconds, compared to 120 to 150 milliseconds for MEO satellites, and 500 to 700 milliseconds for GEO satellites. As a result, each type serves different functions. MEO satellites are generally used for navigation systems like GPS and Europe’s Galileo – prompting some scepticism at the time of the OneWeb rescue, when Cummings and Johnson suggested that its LEO constellation could serve as a foundation for a UK equivalent of Galileo, which uses MEO satellites. Whereas LEO satellites, owing to their low latency have become indispensable for modern military operations.

The LEO Satellite Revolution in Modern Warfare

The Ukrainian NEMESIS drone. Photo Credit Militarnyi

The Ukraine-Russia War has demonstrated the revolutionary impact LEO satellites have had on modern conflict. Ukraine have primarily been using Starlink’s systems, and its impact is hard to overstate. LEO satellites offer critical advantages for modern warfare. Their high-speed and low latency enable real-time communication, intelligence sharing and precision targeting. Traditional fibre-optic networks, while fast and not susceptible to remote jamming, rely on fixed terrestrial infrastructure, which is locally deployed and vulnerable to sabotage and destruction. Similarly, local cellular networks can be quickly disabled by physical attacks or electronic warfare.

In contrast, LEO constellations, supported by globally distributed ground stations and a constantly changing web of satellites, are far more resilient - only the terminals are locally deployed. Their ability to operate independently of local infrastructure makes them useful for contested environments, offering militaries a persistent and hard-to-target communications backbone wherever it’s needed. These capabilities are useful in non-military emergency situations as well, like when 100 Starlink terminals were deployed during the 2021 German floods. Severe floods destroyed communication infrastructure, but using Starlink’s terminals families and rescue workers were able to get back online.

LEO constellations have enabled unmanned systems, particularly aerial and naval drones, to operate at unprecedented ranges, coordinated and guided via satellite links. With drones costing anywhere from a few hundred to several tens of thousands of dollars, yet capable of inflicting lethal damage, they have become a deadly tool of asymmetric warfare. In Operation Spider’s Web, for instance, Ukraine is estimated to have used just 117 attack drones to strike 41 Russian aircraft, including around a third of Russia’s strategic cruise missile-carrying bombers.

The Eutelsat-OneWeb Merger

In an ironic twist, just 3 years after being rescued by the UK government and Bharti Global – and heralded by Dominic Cummings as a symbol of Brexit sovereignty - OneWeb merged with the French GEO satellite company Eutelsat in September 2023. The deal created Eutelsat-OneWeb, a hybrid Anglo-French operator combining GEO and LEO capabilities. More than a corporate transaction, the merger marked a rare instance of post-Brexit industrial cooperation, with both the UK and French governments retaining stakes in the newly merged entity.

By the time of the merger, OneWeb was still struggling with cash flow pressures and required significant new investment to expand its satellite constellation and remain competitive in a market rapidly dominated by Starlink. For OneWeb, merging with Eutelsat provided access to capital, a broader customer base and the commercial infrastructure of an established player. For Eutelsat, who had until then operated only GEO satellites, the deal offered a way into the LEO market. Combining the two operators was expected to lead to synergies and a boost to revenues and profitability. Post-merger, Eutelsat operated 36 GEO satellites and 428 LEO satellites, making it the second largest LEO operator globally, though still dwarfed by Starlink, which at the time had 5,157 LEO satellites in orbit. Strategically, the new entity was pitched to be a global leader in space communications by combining its network of density and high throughput GEO satellites, with the low latency LEO satellites.

Starlink’s Dominance and the West’s Dependence and Strategic Vulnerability

Elon Musk. Photo Credit Reuters.

Today Starlink remains the largest and most dominant LEO satellite operator in the world, representing roughly 65-73% of all active LEO satellites. Their dominance in this strategically crucial sector means Elon Musk, a private citizen, wields disproportionate geopolitical influence. Since Russia’s full-scale invasion of Ukraine in 2022, Starlink is estimated to have deployed over 50,000 terminals and has been crucial in enabling Ukraine to defend itself. Consequently, Ukraine has become critically dependent on Starlink for both military and civilian communications, as no other LEO provider comes close to its scale or impact. Dependence on Starlink, a commercial operator, creates a strategic vulnerability not just for Ukraine but also the West.

Starlink’s dominance, combined with Musk’s increasingly erratic behaviour, has triggered alarm among Western leaders, not least French President Emmanuel Macron, who has described Europe’s reliance on foreign LEO constellations as “madness”. For Europe, the Ukraine-Russia war has driven home a hard truth: strategic dependence on non-European LEO systems, especially those subject to private or extraterritorial control, represents a serious risk. Alternatives are being explored, most notably Eutelsat, the world’s second-largest LEO operator with over 600 satellites. But Eutelsat currently lags behind in terms of capability, cost and the scale of terminal deployment. For now, Starlink remains indispensable, but Macron is actively pushing for European space autonomy. In that context, Eutelsat, while currently far from a match for Starlink, may prove a critical asset in restoring strategic balance and securing Europe’s digital sovereignty in future conflicts.

France’s Push for Eutelsat as a European Champion

Emmanuel Macron. Photo Credit Business Today.

In response to the West’s strategic dependence on Starlink for LEO services, France has led a €1.5 billion capital raise for Eutelsat, investing €717 million directly into the business themselves and more than doubling its ownership stake in the company. The UK government, despite no longer being an EU member, has joined the effort, committing €163 million to maintain its roughly 11% ownership stake. This injection of capital is part of a broader push to secure Europe’s LEO satellite autonomy and solidify Eutelsat’s role as a strategic European asset. The funding will support the expansion and upgrade of its LEO constellation, improving both capacity and coverage. Crucially, the capital raise will also deleverage the business, which stood at around 3.9x net debt to EBITDA at the end of 2024, with a target of 2.5x by the end of 2025. Reflecting this improved outlook, Moody’s has placed Eutelsat’s credit rating under review for potential upgrade, citing the increased French state support.

This renewed state backing comes as President Macron moves to embed Eutelsat more deeply within Europe’s defence and security architecture. A €1 billion, 10-year framework agreement signed with the French Ministry of Defence gives the military priority access to secure LEO capacity and includes measures to adapt the constellation for military-grade use. Macron has framed investment in Eutelsat as a question of European sovereignty, calling on European countries and companies alike to support the venture as part of a wider push to reassert Europe’s role as a space power. France has long harboured mistrust toward the US, particularly regarding Europe’s reliance on Starlink, and is now more assertively working to persuade other European countries to adopt its position. Under Macron’s leadership, France has increasingly sought to integrate civilian and military satellite infrastructure, capitalising on the cost, capacity and performance benefits of dual-use systems.

Security by Surprise: When Leaders Stumble into Success

What started as a Brexit freedom play by Cummings and Johnson to stake Britain’s claim in space has ended, with no shortage of irony, in a French-led venture championed by Macron as the key to European defence autonomy. LEO satellites have become critical infrastructure in modern warfare, maintaining communications in degraded environments and enabling unmanned systems to wage deadly asymmetric warfare. Yet this strategic domain is currently dominated by Starlink, a commercial platform controlled by Elon Musk, whose growing unpredictability has exposed a glaring vulnerability in Western defence planning. As Europe wakes up to the risks of outsourcing its military backbone to a private foreign actor, Macron is leading the charge for European space autonomy, placing Eutelsat at the centre of efforts to build a domestic, credible alternative.