For a long time, Europe has been a credible space power with major successes embodied in programmes such as Copernicus and Galileo. But the global space economy is changing quickly – incremental approaches are no longer enough to reclaim leadership.
As a newly published CEPS Task Force report details, it’ll take bold moves that will impact the whole space governance structure, as well as a shared vision and better investment, to transform Europe into a true twenty-first century space power.
That’s because space is no longer only about exploration or scientific prestige. It’s increasingly about competitiveness, security and technological capability. The global space economy could reach nearly USD 1.8 trillion by 2035, expanding much faster than global GDP.
At the same time, launch costs continue to fall thanks to reusable rockets, standardised components and new manufacturing techniques. Cheaper launches have enabled new ambitious projects, such as megaconstellations like Starlink and Project Kuiper, which are transforming connectivity, providing broadband services in remote areas and supporting a wide range of data-driven applications.
The EU has strong scientific capabilities, a competitive aerospace industry and a long tradition of cooperating in space. Yet its relative position in the global space economy has weakened over time. Europe’s share of upstream space markets – R&I, manufacturing and launching hardware like rockets or satellites – has declined over the past decade, and its institutional spending remains much lower than the US and China.
The issue isn’t a lack of talent or technology. Rather, it reflects structural constraints that make it harder for Europe to translate capability into scale.
One of the main challenges is fragmentation. Europe’s space ecosystem is rich and diverse but it’s often difficult to coordinate. Responsibilities are spread across the European Commission, the EU Agency for the Space Programme (EUSPA), the European Space Agency (ESA) and multiple national space agencies. This architecture has delivered major achievements, such as Galileo, but it can also create overlapping mandates, slow procurement cycles and unclear accountability.
In space, speed matters – and Europe’s institutional complexity is a clear disadvantage.
Financial fragmentation also plays a role. Europe’s space sector still depends heavily on public demand, while private investment remains relatively limited compared with the US. Venture capital activity in European space companies is growing but many startups still struggle to secure the funding needed to scale. Consequently, promising innovations often stall before reaching the market in what has been called ‘the Valley of Death’.
The sector’s industrial structure reflects a similar pattern. Europe has several large system integrators and a dynamic ecosystem of SMEs and startups. But the absence of a coherent industrial strategy can make it difficult for companies to scale globally. In contrast, geopolitical adversaries and market competitors, such as the US, benefit from strong venture capital ecosystems, mission-driven procurement and a large integrated market.
These trends matter because space is strategic. Satellite infrastructure underpins navigation, communications, Earth observation and defence capabilities. Losing ground in this domain would have consequences well beyond the space sector. It would affect Europe’s ability to shape technological standards and maintain its ability to operate autonomously critical infrastructures.
The problem isn’t the absence of initiatives but the lack of alignment across them. Europe already has strong programmes, capable institutions and an innovative industrial base. What it needs is a governance and investment framework that allows these assets to work together more effectively.
A first step is to clarify the roles of Europe’s institutional actors. The ESA has unique technical expertise and is well placed to focus on long-term research, technological development and exploration. At the same time, the EU can play a stronger role in managing the operational phases of major programmes and in building a ‘single market for space services’ through harmonised rules and investment frameworks.
Financing is equally important. Europe’s ambitions in space will require more stable and long-term investment. A European Space Fund, potentially anchored within the European Investment Bank, could help support startups, scaleups and strategic programmes while attracting private capital to the sector.
Public procurement also deserves attention. Europe’s procurement cycles are often slower than those of its global competitors. More flexible and innovation-friendly procurement models could accelerate the development and deployment of space technologies while encouraging greater private investment.
Finally, Europe needs a Space Industrial Strategy. Rather than trying to cover every segment of the value chain equally, policymakers could focus on key areas where European autonomy is particularly important, such as launch capabilities, secure connectivity and space-enabled services.
In many ways, space has become a test of Europe’s ability to act collectively in critical technologies. What remains uncertain is whether it can align its institutions, investment and strategy around a shared vision.
But the choice is clear – Europe can continue managing fragmentation and risk losing ground in a rapidly evolving sector. Or it can simplify governance and focus on scale.
In the new space economy, hesitation comes at a cost. The real question is not whether Europe can afford to act… but whether it can afford not to.
To read the full Task Force report that this commentary is based on, please click here.
