Europe’s Space Sector in 2025: Growth, Consolidation, and New Pressures

By Stephane Duponcheele

The European space sector has seen remarkably high dynamism in 2025 relative to preceding years. Partially due to a renewed focus on competitiveness in the EU’s agenda, and the ever-growing pressure from the Trump administration, homegrown European alternatives to various US companies are increasingly being sought out. A case example for this new momentum in Europe is the growth of The Exploration Company (TEC), a Munich based startup, which hopes to win contracts with the European Space Agency (ESA) for new cargo capsules to supply the International Space Station. TEC’s recent acquisition of Thrustworks Additive Manufacturing GmbH this year underlies their desire to integrate innovative industrial practices to their designs. TEC has moved quickly as well, having advanced from concept to a small- scale demonstrator in just four years. TEC’s grand ambition, driven by its founder and CEO Hélène Huby, is to become a global company. “We want to master the whole chain of space transportation,” she told the Financial Times.^[1]

On the other side of the European space industry in terms of scale are the industry primes of Airbus, Thales and Leonardo, which earlier this year struck a deal to merge their space-related branches to create a European satellite champion. The deal, which is valued at around €6.5 billion and estimated to employ roughly 25,000 people across the continent, aims to consolidate Europe’s satellite and space systems manufacturing under one powerful company, which — it is hoped — will help it achieve the economies of scale necessary to compete with the likes of Elon Musk’s Starlink.^[2]

One customer of the new company in the coming years will likely be France’s Eutelsat, which has seen explosive demand in its Low Earth Orbit (LEO) connectivity services through its OneWeb platform. Though it has seen shrinking margins overall this has mostly been due to the collapse in demand for its legacy television services, with demand for OneWeb increasing 84 percent within a year. The most direct way Eutelsat hopes to capitalise on this increased demand is by increasing the size of its OneWeb constellation, with the company making progress on a $1.7 billion capital hike to fix its balance-sheet problems and expand and maintain its fleet of 650 satellites.^[3]

Eutelsat’s investment plays into the larger trend of increased traffic in LEO, which is putting ever more risk into the Space insurance market. As written on by Hogan Lovells, the growing threat of space collisions is prompting insurers of satellites to reassess their exposure. “Pricing remains challenging due to the unpredictability of collision risks, especially from untracked debris and the surge in the number of satellites in orbit.”^[4] Governments are taking notice, however; the EU’s EU-SST consortium, composed of 15 nations and chaired by France, tracks over 400 satellites through its CAESAR service. The UK operates its own system as well, to support national tracking efforts. These initiatives are hoped to enhance insurers’ ability to assess and manage orbital risk effectively, ensuring that space does not become prohibitively expensive to invest in.

In fact, 2025 can be largely characterised by extraordinary governmental interest in Space across Europe. In November, Germany approved its first space strategy, as part of a push in defence spending by Berlin.^[5] The strategy matches the mood of Germany’s increased spending in space, pledging €35bn by 2030, and increasing its ESA contribution to over €5bn, resulting in ESA’s largest three-year budget ever, of €22bn. The new figure represents a 30% increase compared to the current budget and reflects the growing recognition of the importance of space for Europe’s security and technological sovereignty. The largest part of the new budget, €4.4bn, will go toward space transportation, namely, to support the European Launcher Challenge, envisioned as an incentive to help European industries catch up to the technological superiority of SpaceX.^[6]

Complementing this push in member state interest in Space, 2025 has also seen the proposal of the EU space act. The proposed act hopes to harmonize rules on the sustainable use of space across European countries, specifically on collision avoidance systems debris mitigation legislation and cybersecurity. The proposal is seen by many as a strong step in the direction of a Unified European Licence, which would make it easier for companies to expand their business across Europe. The prospect of a European single market for Space is greatly welcomed by many businesses, with the high cost and talent requirement of the industry often necessitating companies to become international across the EU.^[7] The proposal has seen some early criticism, however. The Act will result in administrative costs for many larger companies, with a report by the Economics for the Progressive Policy Institute suggesting that satellite manufacturing could see demand fall by 13.6%.^[8] The proposal has also gained criticism from the United States, who warned that it would place “unacceptable regulatory burdens” on US companies who wish to export their services to the EU.^[9]

Overall, the developments of 2025 point to a European space sector that is entering a new phase of commercially driven growth underpinned by strong political will. Europe is actively reshaping its space ecosystem to improve competitiveness, achieve scale, and reduce strategic dependence on external providers. Rising demand for LEO connectivity, significant capital mobilisation, and unprecedented public investment through ESA and national budgets signal growing market confidence and a belief in the sector’s long-term viability. At the same time, this momentum is tempered by clear and evolving risks. Insurance uncertainty, and the potential cost burden of new regulation underscore the capital-intensive and complex nature of space commerce. However, going forward into 2026, if regulatory harmonisation, risk management, and industrial scaling can be balanced effectively, Europe’s space industry seems well positioned to translate its current dynamism into sustainable global competitiveness.

Sources:

• https://www.ft.com/content/507ec01a-a653-4b5b-b87d-e037431655d9

• https://www.ft.com/content/a490b870-66b0-4745-be21-23f42057462d

• https://www.ft.com/content/48860049-bfb5-4486-8ac5-e350ee6cb9af

• https://www.hoganlovells.com/en/publications/space-insurance-developments-in-the-uk-and-europe

• https://www.ft.com/content/744200c3-de7c-4ae2-9135-f6c4e5228a2c

• https://sciencebusiness.net/news/aerospace/esa-members-agree-eu22-billion-three-year-budget

• https://www.hoganlovells.com/en/publications/the-eu-space-act-a-new-proposal-towards-a-european-space-economy

• https://orbitaltoday.com/2025/12/09/eu-space-act-could-strip-hundreds-of-millions-from-european-and-us-firms/

• https://europeanspaceflight.com/us-government-calls-eu-space-act-regulations-unfair-and-unwarranted/

  
  

Edited by Artyom Timofeev

Image source: https://european-union.europa.eu/institutions-law-budget/institutions-and-bodies/search-all-eu-institutions-and-bodies/european-union-agency-space-programme-euspa_en