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UK space contracts under threat due to Brexit

UK space contracts under threat due to Brexit

12/04/17

Leaving the EU could put UK space contracts under threat as the European Commission is seeking the ability to cancel existing contracts

The Financial Times has reported UK companies could face difficulties maintaining European space contracts post-Brexit.

The news followed the European Commission laying out new terms for the latest phase of the Galileo satellite navigation system, in which it has specified it wants the right to cancel existing contracts without penalty if the supplier is no longer based in an EU member state. This would be a major blow for UK companies, who have been involved in a number of lucrative space contracts.

Additionally, the Commission is also pushing to ensure costs are recouped and wants suppliers who are ejected from the programme to repay the costs of finding a replacement.

Pushed out

Galileo is an EU-funded project that is managed by the European Space Agency; member states share the work between them. A new security relationship would need to be negotiated with the EU post-Brexit for the UK to retain access to the project.

The Financial Times said the changes to the clause would leave the UK pushed out of the project even before it leaves the EU.

Furthermore, the new clause could have a significant economic impact. It could see high-tech space firms in the UK leave, which might put a dampener on the government’s aim to benefit from the £400bn a year global space market.

Standard practice

Speaking to the Financial Times, a UK government official said: “It feels like the UK is being targeted. We have been fighting to stay involved in Galileo whereas some European partners are working to push us out.”

However, EU officials said the clause is “a standard and well-established practice” in contracts, and denied claims it was a move designed to squeeze UK companies out of the EU sector.

The UK is set to leave the EU at the end of March 2019. The process of withdrawing from the EU was triggered on 29 March this year and will see two years of negotiations between the government and EU officials.

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