Even more surprising than Britain’s June 23 vote to leave the European Union was the fact that so few people, in Britain or elsewhere, had seriously considered the consequences of a pro-Brexit vote.

Polls had consistently predicted the decision could land either way. But U.S. and European stock markets had nonetheless risen on the assumption that the stolid British, after flirting with an exit, would elect to remain married to the EU.

Starting at dawn June 24, that all collapsed in a collective sky-is-falling dread that Britain would be exiting all European space programs, forcing the remaining nations to react.

Credit: SpaceNews/ Tom Kimmell

Credit: SpaceNews/ Tom Kimmell

The dust did not settle in the following days, but people did begin to get a grip. British officials said they were in no hurry to start divorce proceedings, and that they planned to remain heavily involved with the future 27-nation EU and the Common Market.

Until Britain notifies the European Council, in writing, of its intent to leave the EU, none of Britain’s rights or obligations with respect to EU programs will be touched, European governments officials said. And once that formal notification is sent, there will follow up to two years of negotiations before the separation takes effect.

Pierre Delsaux, deputy director general at the European Commission’s DG-Growth directorate, which manages most of the EU space efforts, said the commission would change nothing in the short term as a result of the Brexit vote.

“Until they’re out, they’re in, and that means 100 percent in,” Delsaux said. “I realize that decisions taken in the coming period, before a formal exit, will have consequences long after, but we cannot anticipate a departure and start doing things differently now with Britain. As for the longer-term consequences, I am hiding nothing when I say: I don’t know. I don’t think anyone does at this point.”

Britain’s role in pan-European space programs is divided into separate administrative and funding baskets. The first is the 22-nation European Space Agency, where 75 percent of Britain’s space budget is spent. Paris-based ESA is not an EU agency and is not directly affected by changes in the EU membership.

No British officials have indicated that the Brexit vote would lead to a generalized disengagement from European affairs, so there is no reason to think any of ESA’s own programs will be affected.

The same is true for the 30-nation Eumetsat meteorological satellite organization of Darmstadt, Germany. Like ESA, Eumetsat does work for the EU but has a separate budget and does not take instruction from Brussels.

EU Space Portfolio

The third bucket is where things are likely to get complicated — once Britain sends its exit letter.

The EU owns Europe’s Galileo positioning, navigation and timing satellite network and the Copernicus environment-monitoring system with its Sentinel series of Earth observation satellites. Galileo and Copernicus are now in full development phase, deploying satellites and drawing on funds made available through the EU’s seven-year Multi-year Financial Framework. The current budget cycle runs to 2020.

The European Commission has hired ESA as technical manager for both programs, much as Eumetsat contracts with ESA to design new generation meteorological satellites.

The next concrete event in the Galileo program is ESA’s July 19 deadline for industry bids on the next tranche of satellites. Airbus Defence and Space and Thales Alenia Space are likely to bid, as the incumbent supplier, OHB SE of Bremen, Germany, with Surrey Satellite Technology Ltd. (SSTL) of Britain as OHB’s satellite payload developer.

The European Union in the past has been prickly about having non-EU companies take major roles in Galileo, and the immediate question is whether the commission could stomach an SSTL-built payload that would not be launched until after Britain’s exit is complete.

Paul Verhoef, ESA’s director of navigation, said he will manage the competition as if Brexit had not occurred, with no discrimination against British bidders. Marco R. Fuchs, chief executive of OHB, said OHB would be fielding the same team, with a front-line role for SSTL, that won the previous 22 Galileo satellites.

Norway, which is not an EU member, had been barred from a role in Galileo until it concluded a security treaty with the European Union. Britain could negotiate a similar treaty that could become effective on the date of Britain’s departure.

The Galileo complications don’t end in orbit. The system’s Public Regulated Service (PRS) signal is encrypted and secured and designed for European emergency services and police. It’s also designed for use by military forces and in that way resembles the U.S. GPS system’s military code.

PRS access is through encryption keys given to member governments. PRS’s performance will be validated by two Galileo Security Monitoring Centers, which manage overall PRS access. One is in France, the other in Britain. Does anyone have a problem with this post-Brexit?

The Horizon 2020 research and development program at the EU, also part of the seven-year budget, distributes monies for a diverse set of pre-commercial space projects. The U.K. has been active here.

Vision2020: The Horizon Network, a group of companies and research institutions active in the program, on June 28 issued a statement on behalf of U.K. participation.

“Vision2020 is working closely with its U.K. members and key policy stakeholders at both the national and European levels to seek clarification on what the net steps will be,” the group’s director, Abdul Rahim, said in a statement.

“The U.K. remains an EU member state for at least two years, so there is no immediate material change to the U.K.’s status in the Horizon 2020 program,” Rahim said. “Vision2020 expects that the European Commission will honor all existing Horizon 2020 grant agreements, and that any new grant agreements entered into while the U.K. remains a member state will be honored in full.”

ESA artist’s concept of two Galileo satellites being released from the Europeanized Soyuz rocket’s Fregat upper stage.

ESA artist’s concept of two Galileo satellites being released from the Europeanized Soyuz rocket’s Fregat upper stage.

The U.K. government has set up 11 Catapult centers to stimulate economic activity in different industries. The Satellite Applications Catapult has benefited from ESA’s relocation of its telecommunications directorate to Harwell, in Oxfordshire, forming the European Centre for Space Applications and Telecommunications.

Stuart Martin, chief executive of the Satellite Applications Catapult, said his operation’s Horizon 2020 links are not large but have been growing.

“Strategically it was going to become a more significant part of what we do, so this is something we would need to review” as a result of Brexit, Martin said.

But most of the companies relocating to Harwell have been EU companies looking to launch their products worldwide. For them, Martin said, nothing should change so long as Britain retains its current policy of increasing its space presence.

“The story for the U.K. — attracting inward investment, becoming the best place to do business, that is still the same,” Martin said. “The U.S. and Canadian and other non-EU companies relocating to Britain for space work are mainly working on ESA programs. So that doesn’t change. And they are here to take advantage of the U.K.’s space growth — in our commitment to ESA, in our national program. The benefit from that doesn’t change.”

The British government and the British industrial space sector have set ambitious goals to increase Britain’s share of worldwide space commerce to 10 percent by 2023, against 6.5 percent now.

Britain’s space sector has been growing much faster than the overall British economy in recent years and in 2013 was estimated at 11.8 billion British pounds, or nearly $19 billion at 2013 exchange rates, with a direct employment base of more than 35,000.

Multiple companies in the United States, Canada, France, Germany, Italy and elsewhere have created British divisions, thereby gaining access to ESA and European Union space project funding.

To the extent that these investments were based on projections of future ESA budgets and Britain’s share in them — 325 million euros ($369 million) in 2016 — these decisions remain as valid today as yesterday.

But with the European Union’s role in space affairs growing, and with its two flagship infrastructure programs — Galileo and Copernicus — designed as forevermore-type commitments, the industrial calculus will be complicated.

Gateway to Europe?

Will the continued ESA membership and whatever U.K.-EU treaties are negotiated be enough to justify a non-U.K. company’s current U.K. strategy? That is not clear.

Britain is best known as an economy driven by services, especially financial services. But Airbus Defence and Space U.K. is mainly a hardware builder and is the dominant corporate space presence in Britain.

If it now becomes more difficult for Airbus to justify funneling European Union work to the company’s Stevenage or Portsmouth plants, how much of that work over time will be shifted to Germany or France or Spain?

Satellite fleet operators are also raising issues. Paris-based Eutelsat, for example, has made Britain the home of Eutelsat’s Quantum flexible payload satellite program, which is funded from ESA mainly by British money.

Eutelsat’s Broadband for Africa project, with Facebook as a partner, is also headquartered in Britain, as is Eutelsat’s Global Government division.

Matt Child, Eutelsat’s vice president for government services, said in April that the company already had begun thinking about Brexit issues. Among the questions:

– The ease of establishing companies and relocating employees?

– Monetary policy and the exchangerate mechanism?

– Institutional relationships, i.e. ESA, ESA [the European Defense Agency, part of the EU]?

– EU trade and technology transfer?

– Attractiveness to international companies who currently see the U.K. as the gateway to Europe?

Child did not pretend to know the answers.