A remote peninsula in Sutherland has been chosen as the home of the UK’s first spaceport.

Vertically-launched space rockets and satellites will take off from the launch site at A’Mhoine, business secretary Greg Clark has announced.

Initial funding of £2.5 million will go to Highlands and Islands Enterprise to develop the site which could see lift-off from the early 2020s and create hundreds of jobs. It will use innovative rocket technology to pave the way for a world-leading spaceflight market in Britain.

The UK Space Agency said it selected the Sutherland site because Scotland is the best place in the UK to reach highly sought-after satellite orbits with vertically-launched rockets.

The UK government is also making available a new £2m fund to boost further horizontal launch spaceport sites across Britain - such as Newquay, Glasgow Prestwick and Snowdonia - subject to business case.

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.

“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.”

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Welcoming the announcement, Charlotte Wright, chief executive of Highlands and Islands Enterprise (HIE), 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.

“HIE expects to be in a position to make an announcement on further financial support for the space sector later today.”

The commercial space sector is estimated to be worth a potential £3.8 billion to the UK economy over the next decade and will support Britain’s modern Industrial Strategy by creating high-skilled jobs and boosting local economies.

Cabinet secretary for finance, economy and fair work, Derek Mackay MSP, said: “The development of a small-satellite launch facility at the Mhoine, Sutherland is a significant first step towards stimulating space sector activity across the whole of Scotland and beyond.

“This very exciting development will build on our existing strengths and ensure we maintain momentum in the development of vibrant space industry. Through companies such as ClydeSpace and Spire Global, we have already taken the title as a front-runner in the small-satellite industry across Europe. But by building a spaceport we are taking big steps towards creating a fully integrated supply chain - to manufacture, launch and operate - all from Scotland.

“A spaceport will open up a wide range of market opportunities and give our businesses a competitive advantage to keep us ahead of the curve. The additional activity generated will create high-skilled jobs and encourage foreign direct investment. It is a must that we take these opportunities to build strong international relations, not only across Europe but on a global scale, to ensure a prosperous future for Scotland and its emerging space sector.

“Sutherland is only a starting point for these opportunities and we will ensure that its benefits are spread across the country.”