A £92m allocation has been made to the UK Space Agency to develop a British satellite navigation system if the country is removed from the EU Galileo project after Brexit.
Ministers fear the UK will be excluded from Galileo, to which it has already contributed, and so be left unable to use either its military or civilian applications. Galileo is intended as an alternative to the US global positioning system.
The cash is being made available from the £3bn Brexit readiness fund, announced last year by chancellor Philip Hammond, and will finance an 18-month study of the engineering, design and development of a UK system, which would provide both civilian and encrypted military signals and be compatible with GPS.
A statement issued jointly by the UK Space Agency, parent ministry the Department for Business, Energy and Industrial Strategy, and the Ministry of Defence, said satellite navigation was increasingly important to the economy and any sustained disruption to it could cost £1bn a day.
Ministers want the UK to remain involved in Galileo and have been negotiating with the European Commission, but said uncertainty over the potential for the nation to be excluded from elements of it meant that contingency planning was essential.
“Without the assurance that UK industry can collaborate on an equal basis now and in the future, and without access to the necessary security-related information to rely on Galileo for military functions such as missile guidance, the UK would be obliged to end its participation in the project,” the statement said.
Business secretary Greg Clark said Britain was a world leader in the space industry and had already played an important role in the development of Galileo.
“We are investing in an alternative option to Galileo to ensure our future security needs are met using the UK’s world-leading space sector,” he said.
“Our position on Galileo has been consistent and clear. We have repeatedly highlighted the specialist expertise we bring to the project and the risks in time delays and cost increases that the European Commission is taking by excluding UK industry.
“Britain has the skills, expertise and commitment to create our own sovereign satellite system and I am determined that we take full advantage of the opportunities this brings, backed by our modern industrial strategy.”
BEIS said the MoD would be “playing a full role in support” of the project.