A peninsula on Scotland‘s north coast has been chosen for the site of the UK’s first spaceport.

Vertical rocket and satellite launches are planned from the A’Mhoine peninsula in Sutherland which the UK Space Agency said would pave the way for space flights.

The agency said the site, between Tongue and Durness, was chosen as the best place in the UK to reach highly sought-after satellite orbits with vertically launched rockets.

Highlands and Islands Enterprise (HIE) will be given £2.5m from the UK government to develop the spaceport which could be up and running by the early 2020s.

Sutherland is the first vertical launch site to be awarded grant money, ahead of other vertical sites at Unst, Shetland, and North Uist in the Western Isles.

The government also announced a new £2m development fund for horizontal launch spaceports across the UK at sites such as Prestwick in Ayrshire, Cornwall’s Newquay, Campbeltown in Argyll and Bute and Llanbedr, Gwynedd, Wales, subject to a successful business case.

The cash is aimed at boosting their sub-orbital flight, satellite launch and spaceplane ambitions.

The space agency said the space-flight market is potentially worth £3.8bn to the UK economy over the next decade.

Mr Turnock added the spaceport grant would “help kickstart an exciting new era for the UK space industry”.

Business secretary Greg Clark said: “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.

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

The consortium behind the Sutherland spaceport proposal includes US aerospace firm Lockheed Martin.

HIE chief executive Charlotte Wright said: “The decision to support the UK’s first spaceport in Sutherland is tremendous news for our region and for Scotland as a whole.

“The international space sector is growing and we want to ensure the region is ready to reap the economic benefits that will be generated from this fantastic opportunity.”

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The news comes a day after the head of a major aerospace trade organisation warned Britain faces an “erosion” of investment in its space, security and defence sectors unless a good Brexit deal is struck with the EU.

“If the costs of operating in the UK become higher, then our ability to attract new investment will be diminished”, Paul Everitt, chief executive of ADS Group, told the BBC.

“We are a long-term industry. When a big investment decision comes along we are not in such a good place. If it continues we could see an erosion of our position.”

The UK’s space sector has seen growth five times greater than the wider economy over recent decades, according to government figures.