Europe's Position in the Global Space Economy (2025)
The global space economy does not operate in a vacuum. Its trajectory is directly influenced by broader trends in global GDP, inflation, trade, and investment, which create both opportunities and constraints for industry players. Understanding this macroeconomic context is therefore a strategic imperative, as these forces shape the environment for public spending, private capital allocation, and international cooperation—the very foundations upon which space capabilities are built.
Global Economic Pressures and Fragmentation
The global economic landscape in 2024 was characterized by a slight deceleration, with worldwide GDP growth reaching 3.1%. While inflation began to moderate, challenges such as resilient service price inflation persisted in advanced economies. A notable indicator of this cooling environment was the slowdown in global trade, with growth projected at a mere 0.7% for the period covering late 2024 and early 2025.
Critically, this slowdown is occurring alongside an accelerating trend of geo-economic fragmentation. Nations are increasingly reassessing trade relationships with a focus on national sovereignty and economic resilience, evidenced by actions such as China's export controls on critical materials and US export restrictions on advanced technology. The strategic implication for the space sector is severe: this fragmentation fragments supply chains, inflates costs, and complicates the cross-border collaboration essential for ambitious space missions.
Europe's Lagging Economic Recovery
Europe's economic performance in 2024 lagged behind the global average, presenting a more constrained environment for investment. The euro area registered a modest GDP growth of 0.8%, accompanied by an inflation rate of 2.4%. While the unemployment rate remained stable at a historically low 6.4%, the overall economic climate was one of caution.
The European Central Bank's monetary policy has had a significant effect on private investment. Despite the ECB beginning to ease interest rates in June 2024, businesses remained hesitant to invest, discouraged by persistently high energy prices, increasing regulatory costs, and the delayed effects of previous monetary policy tightening. Compounding this challenge, high public debt ratios across many European nations are expected to create long-term spending pressures, which could limit the capacity for future public investment in strategic sectors like space.
This challenging macroeconomic environment directly constrains public budgets and heightens the risk for private capital, setting a precarious stage for Europe’s space investment decisions.
Stagnating Public Share vs. Surging Private Capital
Investment is the primary driver of capability, innovation, and competitiveness in the space sector. A close examination of the two critical funding streams—public institutional budgets and private venture capital—reveals a fundamental divergence in Europe's investment strategy and momentum compared to its global competitors. While public funding is stagnating, the private sector is showing unprecedented dynamism.
Public Space Investment
In 2024, global public space budgets reached a historic high of €122 billion, reflecting a robust 9% increase. This growth was overwhelmingly driven by defence spending, which expanded by 12%. The share of defence has been continuously growing and exceeded civil space spending for the third time in 2024, representing around 54% of the global total. In stark contrast, Europe's consolidated public space budget stood at €12.6 billion, growing by a marginal 2%. This sluggish growth has resulted in a continued erosion of Europe's global standing.
The following starkly illustrates the disparity between the major space powers:
61% - United States - Largest budget, defence-driven growth
15% - China - Rapidly growing, surpassing Europe
10% - Europe - Shrinking global share, civil-focused
Furthermore, when measured as a share of economic output, Europe's relative investment intensity is modest. Its public space budget accounts for just 0.06% of its GDP and 0.12% of total government expenditures, placing it well behind the commitment levels of the United States and Russia.
Private Capital Creates New Opportunities
While its public investment lags, Europe's private space sector is experiencing a remarkable surge. In 2024, European space ventures raised a record-breaking €1.5 billion, a 56% increase from 2023. This has dramatically shifted Europe's position in the global landscape of space investment, with its share of private capital capture surging from a mere 3% in 2019 to an impressive 22% in 2024.
This momentum is exemplified by a series of major funding rounds in 2024:
Isar Aerospace: Secured a >€65 million extension, bringing its Series C total to over €220 million for its launch vehicle development.
D-Orbit: Raised €150 million in a Series C round to advance its in-orbit servicing and space-based cloud computing capabilities.
The Exploration Company: Closed a €148 million Series B round to fund the development and testing of its Nyx reusable space capsule.
ICEYE: Added a €60 million extension to its growth funding round, bringing its total raised in 2024 to €146 million.
This investor confidence extends to the adjacent sector of Defence, Security, and Resilience (DSR), where European Deep Tech startups attracted a record €4.8 billion in VC funding.
This represents a 30% growth over two years, signaling a strong belief in Europe's capacity for innovation in critical dual-use technologies.
The key takeaway is clear: while Europe's public investment in space is falling behind its global competitors, its private sector is demonstrating significant dynamism and attracting record levels of capital, setting the stage for an analysis of how this investment translates into operational capacity and market share.
From Investment to Industrial Output
The upstream sector—encompassing the manufacturing of satellites and the provision of launch services—is the industrial foundation of all space activity. Its health and competitiveness are direct indicators of a region's ability to execute its strategic ambitions in space. This section assesses Europe's industrial standing by analyzing its share of global space activity and its performance in the portion of the market it can realistically compete for.
Global Space Activity
Global space activity reached a new peak in 2024 with 259 orbital launches (+18%) deploying 2,877 satellites. This activity, however, was highly concentrated, underscoring the dominance of the United States and China.
United States: Conducted 154 launches, representing over half the global total. This was largely driven by 90 self-provisioned SpaceX launches for its own Starlink constellation. The US was responsible for launching 79% of all spacecraft deployed globally.
China: Maintained its high operational tempo with 68 launches, accounting for 26% of the global total.
A key factor shaping these statistics is the deployment of Starlink's heavier "V2 Mini" satellites. These spacecraft alone accounted for a staggering 70% of the total mass launched into orbit worldwide in 2024, profoundly influencing launch market dynamics.
Evaluating Europe's Upstream Market Position
The global upstream market reached a value of €63 billion in 2024, marking a 22% expansion. Despite this market growth, Europe's position has continued to decline. Its share of the global upstream market was only 6% in 2024, a sharp fall from 16% as recently as 2018.
This decline is compounded by a structural market disadvantage. Approximately two-thirds of the global upstream market is considered inaccessible to European industry. This portion is "captive," driven by the institutional programs of competitors like the US and China, as well as by vertically integrated mega-constellations like Starlink, which self-provisions its manufacturing and launch needs.
Within the remaining "accessible market," Europe's performance is also facing pressure. Historically, European industry captured over half of this market. In 2024, however, its capture rate degraded to just 33%, down from a 52% average over the past decade. This concerning trend, impacted by factors such as the decline in GEO satcom market demand, indicates that even where Europe can compete, it is losing ground.
Europe's upstream sector faces a dual challenge of intense competition and significant structural market disadvantages. With its industrial base under pressure, the strategic focus naturally shifts towards the downstream markets, where space-enabled services may offer a stronger competitive position.
Capitalizing on Space-Enabled Services
The downstream sector, which leverages space assets to deliver services on Earth, represents the largest and most commercially driven part of the global space economy. This section evaluates Europe's competitive standing in the key application segments of Earth Observation, Satellite Communications, and Navigation, where the economic impact of space is most directly realized.
The global downstream market was valued at €408 billion in 2024, posting a healthy 9% growth rate. Europe holds a significant position in this domain, with a market size of €78 billion, which corresponds to a strong 19% share of the global total. Critically, over 90% of this market is commercial in nature, highlighting it as a key area of strength and opportunity for European industry.
A breakdown of the major downstream segments reveals a landscape of both established strength and dynamic change.
• Earth Observation (EO):
Europe is the world's second-largest market for EO data and services, commanding a 22% share, behind only North America (44%).
The market is composed of revenues from commercial data sales (38%) and, more significantly, from value-added services that transform raw data into actionable insights (62%).
• Satellite Communications (Satcom):
This segment is undergoing a profound transformation driven by non-geostationary (NGEO) constellations like Starlink. The resulting jump in capacity supply and consequent decrease in capacity prices are driving significant strategy shifts among operators.
In response to this price pressure, a powerful trend of vertical and horizontal integration is sweeping the industry, with established operators like SES forming strategic partnerships with new players such as Starlink to remain competitive.
• Satellite Navigation (GNSS):
This is the most deeply integrated downstream segment, with consumer solutions (59%) and road transportation (35%) accounting for nearly 95% of all revenues.
The ubiquity of satellite navigation is demonstrated by the fact that smartphone applications—from ride-hailing to mobile banking—now represent over 40% of total GNSS downstream revenue, embedding space services into the very fabric of the modern digital economy.
The downstream sector is a vital area of competitive strength for Europe. However, sustaining this leading position in a rapidly evolving market is contingent upon securing the necessary human capital and adapting to emerging strategic drivers that are reshaping the entire space ecosystem.
Workforce Dynamics and the Rise of Defence
Long-term strategic success in the space economy depends on two fundamental pillars: a skilled and dynamic workforce to drive innovation, and the agility to adapt to pivotal market trends. This section examines the growth of Europe's space workforce and the increasingly influential role of defence as a primary driver of demand and technological development.
The European upstream space industry's workforce is expanding, reaching 62,659 Full-Time Equivalents (FTEs) in 2023. This represents a notable 9% increase from 2022 and continues a sustained growth trend. A key feature of this expansion is the dynamism of the new space ecosystem, with startups now employing over 8,500 FTEs and accounting for 14% of the total European upstream workforce. However, this growth is not without risk; the majority of these new players remain unable to cover their costs with sufficient revenues, resulting in additional funding needs until businesses become mature.
The Defence Demand Driver
The data reveals a seismic shift in the space economy, with defence emerging as the most powerful and fastest-growing demand driver:
Satellite Launches: The number of satellites launched for defence customers worldwide has increased by a dramatic 280% over the past five years, reaching 173 satellites in 2024 alone.
Mass Launched: China's mass launched for defence purposes has grown by a factor of nearly six over the last two decades. It now accounts for almost 40% of the global five-year total, demonstrating a massive strategic investment.
Manufacturing Orders: The value of global satellite manufacturing orders from defence customers surged to €8 billion in 2024. This figure represents 67% of the total order value for the year and marks a 72% increase over 2023.
These indicators are evidence of a systemic, global militarization of space, directly reflecting the public investment trends reshaping the entire sector.
Europe's challenge is now to pivot its growing and innovative workforce towards the immense strategic and commercial opportunities created by this undeniable shift to defence-driven demand.
Dynamic Private Investment: Record €1.5B raised in 2024 (+56%), with Europe's global share surging to 22%.
Lagging Public Investment: A slow 2% budget growth and a shrinking 10% global share, far behind the US and China.
Robust Downstream Market: A strong 19% share of the €408B global downstream market, with leadership in key service areas.
Eroding Upstream Competitiveness: Global market share has fallen to 6%, with its capture of the accessible market down to 33%.
Growing and Innovative Workforce: Upstream employment grew 9% to over 62,000 FTEs, with startups accounting for 14% of the total.
Structural Market Disadvantage: Two-thirds of the upstream market is inaccessible due to captive demand from global competitors.
Emerging DSR Ecosystem: Record VC funding in Defence, Security, and Resilience startups indicates a strong innovation base.
Over-Reliance on Civil Programmes: An 88% civil focus in public spending is misaligned with the global trend of defence-driven growth.
The strategic landscape for Europe in the 2024 global space economy is one of sharp contrasts. Europe possesses a vibrant private innovation ecosystem, a growing and skilled workforce, and a strong, commercially-driven position in the downstream service economy. However, it faces a significant and deepening strategic challenge in the foundational upstream sector, driven by a widening gap in public investment and the structural market power of its global competitors.
Future success will depend on Europe's ability to effectively leverage its commercial and innovative strengths to compete and retain sovereignty in a global space economy increasingly defined by the strategic ambitions and defence imperatives of its superpower rivals.
For more information read the ESA Report on the Space Economy 2025>
