The Government Actuary’s Department has published analysis for the UK Space Agency on managing exchange‑rate risk arising from euro‑denominated payments to the European Space Agency. The notice, issued on GOV.UK on 24 November 2025, frames the work as protecting public funds while supporting UK space objectives.
The analysis confirms a common public finance challenge: UKSA’s regular payments to ESA are made in euros, while its sponsor department, the Department for Science, Innovation and Technology, funds UKSA in pounds sterling. GAD modelled historic exchange‑rate movements and assessed options that fix rates ahead of payment dates to reduce volatility in the sterling cost of these obligations.
HM Treasury’s Guidance for the Management of Foreign Exchange Exposure, introduced on 31 March 2023, requires bodies subject to Managing Public Money to set an FX strategy and obtain approvals through a defined process overseen by an FX Advisory Board. GAD’s work provides the evidence base departments need to align operational payment practices with that approval framework.
Recent accounts illustrate the scale of exposure. UKSA recorded £368.0 million of spending with ESA in 2024–25, including a £2.2 million constructive loss on a foreign‑exchange transaction linked to membership payments. In 2023–24, ESA subscriptions totalled £482.2 million. The UK’s commitments agreed at ESA’s 2022 ministerial council span roughly £1.84 billion for 2022–27, so exchange‑rate movements can materially affect annual sterling outturns.
GAD states it used historical exchange data to illustrate risk and to evaluate the effect of securing rates in advance. In practice, forward currency contracts are a standard way to obtain cost certainty when a future foreign‑currency payment is known, a method described in HMRC’s Corporate Finance Manual.
For programme managers and finance teams, the immediate implication is predictability. Fixing rates around ESA payment schedules can stabilise sterling budgets and reduce the likelihood of in‑year adjustments or deferrals caused by currency swings. GAD notes that its analysis will inform policy decisions on the mechanics and timing of these payments.
Decisions to hedge remain subject to Treasury tests of regularity, propriety and value for money. Accounting Officers are expected to document risk limits, governance, and counterparties before entering instruments, ensuring alignment with the FX Approval Framework introduced in 2023.
Governance arrangements are also evolving. DSIT announced on 20 August 2025 that UKSA will be brought into the department by April 2026 to streamline support for the sector. Treasury management activities, including foreign‑exchange management, will continue within central government rules set out by HM Treasury.
Policy takeaway for readers: currency hedging for UKSA is a routine, rules‑based public finance tool rather than a policy shift. The GAD exercise equips officials to calibrate coverage and timing against ESA payment cycles while remaining within HM Treasury’s approvals and accountability framework.