State and Prospects of the German Space Economy

_ J.C. Kofner, chief economist, MIWI Institute. Munich, 27. July 2025. 

Introduction

Over the past decades, the German space economy has developed into a dynamic economic sector that combines technological innovation with geopolitical relevance. Germany, particularly Bavaria and Bremen, plays a central role in the European space industry. With around 10,000 employees in the space industry in 2024 and as one of the largest contributors to the European Space Agency (ESA) alongside France, Germany is well positioned to benefit from the global space economy [1, 2]. The industry not only generates direct jobs but also promotes key technologies such as artificial intelligence (AI), quantum computing, and space manufacturing. According to ESA Director General Josef Aschbacher, every euro invested in space yields an economic return of 3 to 7 euros [3]. The global space economy generated revenues of 339 billion euros in 2023, of which 242 billion euros came from the non-governmental unmanned space sector and 97 billion euros from manned spaceflight, with a 23% growth in the unmanned sector between 2013 and 2023 [4].

This paper analyzes the current status of the German space economy, compares it with other spacefaring nations and private actors, and formulates policy recommendations to strengthen competitiveness. Special focus is placed on Bavaria’s and Bremen’s contributions as well as strategic initiatives such as the “Bavarian Moon Summit” and the calls for increased ESA contributions.

Status of the German Space Economy

Economic Importance and Employment

The German space industry directly employs around 10,000 people (as of 2024), with Bavaria playing a leading role with approximately 8,000 direct jobs in the space industry and a total of 30,000 in the aerospace sector [1, 3]. Bavaria counts around 500 aerospace companies with annual revenues of 12 billion euros [5]. Bremen, despite its smaller size (700,000 inhabitants), hosts 140 space companies, 20 research institutes, and 12,000 employees generating 4 billion euros in annual revenue [5]. Companies such as OHB, MT Aerospace, Airbus Defence and Space, as well as startups like Isar Aerospace and Rocket Factory Augsburg, are driving innovation. Lena Stern (OHB) emphasizes a clear growth phase with planned new hires [3]. About 40% of ESA funding that flows back to Germany goes to Bavaria, while Bremen shines with projects like the European Service Module of the Orion capsule for NASA’s Artemis program [3, 5].

Investments and Funding

The German federal budget 2025 allocates approximately 2.3 billion euros for aerospace, including 736.5 million euros for the German Aerospace Center (DLR), 944 million euros for ESA contributions, and 292 million euros for innovation programs [6]. Bavaria has directly invested around 35 million euros in spaceflight in recent years, supplemented by funds from the High-Tech Agenda, and announced an additional 63 million euros for expanding the DLR site in Oberpfaffenhofen [3, 5]. At the federal level, space policy is being advanced by Dorothee Bär (CSU), the first federal minister for spaceflight [3]. The new federal government plans multibillion-euro investments in space infrastructure, including a “moon control center” in Oberpfaffenhofen in cooperation with ESA and NASA [7].
The ESA Council of Ministers in November 2025 in Bremen will decide on a budget for 2026–2028. ESA Director Aschbacher is calling for an annual budget increase of 10% and a doubling of the German contribution to 2 billion euros per year, while the German Aerospace Industries Association (BDLI) and German companies are even calling for 6 billion euros [3, 6, 8]. The Bavarian state government supports this demand and additionally advocates for 1 billion euros for a national space program [5].

Technological and Economic Innovations

The German space industry is strong in areas such as satellite technology, earth observation, and navigation. Around 80% of global weather forecasts are based on satellite data [3]. Companies such as OHB (Bremen) are successful in the Galileo program and scientific missions, while Jena-Optronik supplies sensors for NASA and ESA missions [5, 7]. The Bremen Drop Tower (ZARM), with a height of 146 meters and 4.74 seconds of weightlessness, is a unique research instrument in Europe [5]. Spaceflight promotes key technologies such as AI, quantum computing, and space manufacturing (e.g., drugs or organ cultivation in microgravity) [3]. The cost of satellite launches has dropped by 90% over the past 20 years, allowing a 50% annual increase in launched satellites between 2019 and 2023 [9]. Startups like Isar Aerospace and HyImpulse benefit from this and are developing their own launch vehicles.

Strategic Initiatives
Bavaria and Bremen are pursuing ambitious space strategies. The “Bavarian Moon Summit” on July 4, 2025, in Oberpfaffenhofen, organized by the Bavarian state government, the DLR, and ESA, underscores Bavaria’s goal of playing a leading role in lunar exploration [3, 5]. The DLR center in Oberpfaffenhofen supplies the ISS with air and electricity and is expected to support lunar missions in the future [5]. The TUM Campus in Ottobrunn is being expanded to become Europe’s largest aerospace faculty [5]. Lena Stern (OHB) emphasizes the need for sovereign European action in space, especially through strategic involvement on the moon [3]. Bremen is potentially developing the first space shuttle with aircraft-like take-off and landing capabilities, which is described as a “platinum standard” [5].

Comparison with Other Space Nations

State Actors

In 2023, global space budgets were as follows: USA (€67 bn), China (€11 bn), Russia (€3.7 bn), France (€3.7 bn), Japan (€2.8 bn), and Germany (€1.9 bn) [10]. The USA leads with the Artemis program, aiming for manned moon landings and the Lunar Gateway by 2027 [11]. China operates the Tiangong space station and plans manned lunar missions by 2040 [11]. India has made progress with the Chandrayaan mission (moon south pole landing) and the Gaganyaan project [11]. Russia remains active through ISS participation and the Luna program but faces geopolitical constraints [11]. ESA focuses on earth observation (Copernicus), navigation (Galileo), and moon missions (e.g., Lunar Gateway) [11]. Germany, together with France, is the largest ESA contributor and Europe’s second largest spacefaring nation, with 10,200 space professionals (2021) [1, 12].

Private Actors

The private space economy is dominated by U.S. companies like SpaceX (value: €168 bn, 13,000 employees), Boeing Defense (€21.5 bn), Lockheed Martin (€93.5 bn), and General Dynamics (revenue: €39 bn) [10]. SpaceX has revolutionized the market with reusable Falcon rockets and Starlink (7,229 satellites as of 02/2025) [12]. In Europe, German companies such as Airbus Defence and Space, OHB, Rocket Factory Augsburg, and Isar Aerospace are competitive, but on a smaller scale. The global private space economy grew by €45 bn (+23%) from 2013 to 2023, with 53% of revenue (€128 bn) from ground-based network equipment and 38% (€91 bn) from communication services [4]. Private investments reached over €65.5 bn between 2021 and 2022, driving innovations such as in-orbit inspection and commercial space stations [9].

Challenges

  • Bureaucracy: Coordination of German space policy is considered inefficient, as responsibilities are fragmented across various ministries and agencies at both the federal and state levels. Experts call for a central authority to consolidate these responsibilities, realize economies of scale, and improve the efficiency of state support for the space sector [3]. Moreover, the German space economy suffers from considerable bureaucratic hurdles, especially climate-policy-driven requirements such as decarbonization targets and sustainability reporting. Additional burdens arise from complex reporting obligations, labor law regulations, and a confusing and costly tax system [8]. Particularly, complex permitting procedures and poor inter-ministerial coordination hinder innovative projects, such as the planned offshore spaceport in the North Sea [3, 8].

  • Funding: Calls to increase public investments in the German space economy to €2–6 bn per year are viewed as unrealistic in light of current budget policy. Federal and state governments are seen by many experts as setting incorrect spending priorities, allocating significant funds to asylum, climate, and energy transition instead of strengthening forward-looking high-tech sectors such as spaceflight. The private sector is also currently unable to invest more, as it is burdened by high energy costs, heavy tax loads, and a weak economy – all of which significantly limit its innovation and investment capacity [3, 8].

  • Global Competition: International competition in the space industry has intensified significantly in recent years, driven by the dominance of SpaceX, China, and India, as well as the emergence of new space nations such as Saudi Arabia and even Peru [9]. In 2024, SpaceX alone carried out 346 rocket launches, more than all other providers combined [12]. These developments increase the pressure on Germany to ensure its technological sovereignty and develop competitive launch capacities, for example through microlaunchers or the planned offshore spaceport in the North Sea [8]. Without a strategic response, Germany risks losing market share to these actors, especially in high-growth areas such as satellite internet and in-orbit services.

  • Sustainability: Space debris poses a growing threat to satellites and space missions, with over 36,000 objects larger than 10 cm congesting low Earth orbit [12]. This debris endangers the functionality of satellites that are essential for communication, navigation, and earth observation. Sustainable use of space is therefore essential and is increasingly being integrated into the UN sustainability agenda [12]. ESA and other international actors are promoting initiatives such as the development of technologies to remove space debris (e.g., using satellites with grappling arms or lasers) and the introduction of satellite design standards that enable automatic disposal after mission completion [12].

  • Markus Söder’s Engagement: Markus Söder’s engagement for spaceflight, especially through the “Bavarian Moon Summit” 2025, is characterized by media-oriented self-promotion that often prioritizes symbolic staging over substantive progress [5]. His demand for an increased ESA contribution of €2 bn annually and €1 bn for a national program sounds ambitious but lacks concrete implementation plans [5]. The announcement of €63 mn for the DLR expansion appears marginal compared to global investments (USA: €67 bn, China: €11 bn), while Bavaria’s space strategy lacks clear milestones [3, 5, 10]. Past initiatives such as “Bavaria One” (2018) show a tendency to instrumentalize spaceflight for electoral purposes, potentially endangering the focus on key technologies such as AI, quantum computing, and space manufacturing and hindering the development of a coherent national strategy [5, 8, 12].

Perspectives

The global space-based economy is growing at 9% annually and is expected to reach €1.68 trillion by 2035 [9]. Germany can benefit in areas such as earth observation, navigation, AI, and robotics. BDLI prioritizes investments in Copernicus, Ariane 6, quantum communication, and in-orbit technologies [8]. The planned spaceport in the North Sea and cooperation with ESA and NASA offer opportunities for technological sovereignty [7]. In the long term, Germany could play a leading role in lunar mining and in-orbit manufacturing [7]. Bavaria’s TUM campus in Ottobrunn and Bremen’s ZARM highlight scientific excellence [5].

Policy Recommendations

Increase Investments

  • Increase Germany’s ESA contribution to €2 bn annually, with a long-term perspective of €6 bn (BDLI, German companies) [3, 8].

  • Establish a national space program with €1 bn [5].

Reduce Bureaucracy and Improve Coordination

  • Establish a central coordination body for German space policy at the federal level to consolidate responsibilities, achieve economies of scale, and improve state support for the space sector [3].

  • Simplify approval processes, reporting obligations, and labor law regulations as well as harmonize the tax system to reduce bureaucratic obstacles and accelerate innovative projects such as the North Sea spaceport [8].

  • Abolish all climate policy requirements and decarbonization targets for the space industry to eliminate regulatory burdens and strengthen the sector’s competitiveness [8].

Technological Sovereignty

  • Increase investments in AI, robotics, quantum communication, and reusability through ESA programs (GSTP, ARTES) [8].

  • Promote development of the North Sea spaceport and a spaceplane with take-off and landing function [5, 8].

Focus on the Moon

  • Support Bavaria’s “moon control center” and DLR expansion to assist lunar missions [5, 7].

  • Expand lunar mining research at TU Freiberg [7].

  • Intensify cooperation with ESA and NASA, e.g., through participation in the Lunar Gateway [8, 11].

Tax Exemptions and Startup Support

  • Introduce a ten-year corporate tax exemption for all companies directly engaged in space exploration.

  • Targeted programs for startups such as Isar Aerospace and HyImpulse [3].

  • Government as anchor customer to commercialize new business models [8].

Sources

  1. (Bundeshaushalt, 2025, https://www.bundeshaushalt.de/static/daten/2025/soll/draft/epl09.pdf): Germany’s federal budget for aerospace in 2025, detailing ESA and DLR funding.

  2. (Handelsblatt, 2025, https://www.handelsblatt.com/technik/forschung-innovation/technologie-deutsche-firmen-fordern-sechs-milliarden-euro-fuer-raumfahrt/100132742.html): German firms call for €6 billion in space investments.

  3. (SZ, AZ, Mainpost, Main Echo, 28.06.2025): Coverage of German space policy, ESA return rates, statements by OHB and Dorothee Bär, and the Bavarian Moon Summit.

  4. (Bardt, 2024, https://www.iwkoeln.de/studien/hubertus-bardt-weltraumwirtschaft-waechst.html): Analysis by the German Economic Institute on global and private sector space revenue growth.

  5. (SZ, AZ, Mainpost, Main Echo, 28.06.2025): Also includes facts on Bavaria’s aerospace industry, DLR Oberpfaffenhofen, TUM Campus Ottobrunn, and Bremen’s contributions.

  6. (Bundeshaushalt, 2025, https://www.bundeshaushalt.de/static/daten/2025/soll/draft/epl09.pdf): Also confirming national space program and innovation allocations.

  7. (MDR, 03.05.2025, https://www.mdr.de/wissen/astronomie-raumfahrt/zukunftsmotor-raumfahrt-100.html): Plans of the new federal government, NASA–ESA cooperation, and future markets like lunar mining.

  8. (BDLI, 2025, https://www.bdli.de/meldungen/esa-ministerratskonferenz-2025-fuer-die-raumfahrt-klare-investitionsentscheidungen): BDLI position paper on ESA funding and national coordination.

  9. (McKinsey & WEF, 2024, https://www.mckinsey.com/industries/aerospace-and-defense/our-insights/space-the-1-point-8-trillion-dollar-opportunity-for-global-economic-growth): Global private investment, launch cost reductions, and long-term growth forecasts.

  10. (Markt und Mittelstand, 2025, https://www.marktundmittelstand.de/technologie/mittelstand-im-orbit-wie-deutsche-unternehmen-vom-weltraum-boom-profitieren): International space budget comparisons and German company participation.

  11. (NASA, ESA, CNSA, ISRO, Roscosmos, 2024–2025): Official agency strategies for lunar and planetary missions.

  12. (Reisch & Brauch, 2025, https://www.ey.com/de_de/insights/consulting/space-race-2-0-was-die-industrie-vom-weltraum-lernen-kann): EY study on global launch statistics, space debris risks, and public-private space race dynamics.

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