European government space spending rose 12% to 13.5 billion euros in 2025, according to an ESA report released July 13, reversing a 3% global decline driven by rising defense budgets. The U.S. still dominated at 58% of global government space spending, with China second at 15% and Europe third at 11%. ESA projects budgets will jump over 20% in 2026 as defense programs expand, particularly Germany's 35 billion euro space security commitment through 2030 and France's 4.2 billion euro military space investment through 2040.
Europe's space industry faces structural disadvantages despite government demand growth. European customers control 67% of the accessible European market but show no preference for domestic suppliers, whereas U.S. and Chinese primes benefit from captive procurement policies. ESA estimates European companies are locked out of over 80% of the 75 billion euro global launch and satellite manufacturing market due to foreign government preferences and vertically integrated constellations like Starlink. Private space investment in Europe declined 8% to 1.4 billion euros in 2025 while global investment surged 60% to 11.7 billion euros, widening the gap further.