The Scottish Highlands are set to become the hub for British space travel, a sector which could be worth an estimated £3.8bn (US$5bn, €4.3bn) to the UK's economy.

The government has highlighted space as a potential major revenue source for Britain, with spaceports potentially making the UK not only the first site in Europe to launch satellites, but also one of the first to capitalise on the huge potential of the commercial space age.

The A'Mhoine Peninsula in Sutherland – one of the northernmost points of Scotland – has been awarded initial funding of £2.5m (US$3.3m, €2.8m), which will be used to develop the UK's first vertical launch site, with the spaceport to open by the early 2020s.

Britain's blossoming space ambitions will be financed by a £50m (US$66m, €56.6m) financial package, allocated by the government's business secretary Greg Clark. As part of that package, £2m (US$2.7m, €2.3m) will be used to develop a horizontal launch spaceport, with locations such as Newquay, Glasgow Prestwick and Snowdonia under consideration for the site.

"As a nation of innovators and entrepreneurs, we want Britain to be the first place in mainland Europe to launch satellites as part of our industrial strategy," said Clark.

"The UK’s thriving space industry, research community and aerospace supply chain puts the UK in a leading position to develop both vertical and horizontal launch sites.

"This will build on our global reputation for manufacturing small satellites and help the whole country capitalise on the huge potential of the commercial space age."

The UK Spaceflight Programme plans to award additional grants to innovative satellite launch companies at the Farnborough International Airshow – a five-day trade event offering the aerospace industry a business platform. Developing low-cost access to space will be important for the sector, particularly in the realm of space tourism.

“This spaceport grant will help to kick-start an exciting new era for the UK space industry, and this is only the beginning of our LaunchUK campaign," said Graham Turnock, chief executive of the UK Space Agency.

"A number of sites across the UK are developing their spaceport plans and engaging with regulators, demonstrating the scale of the industry’s ambition and confidence in a future UK spaceflight market, which could attract companies from all over the world to invest in Britain.

"We are committed to supporting a commercial market for access to space in the UK, and we will continue to engage with any company who seeks to operate here."