LONDON—Cooperation between Western Europe and the United States on the manned space station have been thrown in doubt by Prime Minister Margaret Thatcher’s decision not to boost the British space budget.

Thatcher’s announcement that there was little immediate hope for an increase in Britain’s $170 million annual spending on civilian space technology dashed the hopes of her partners in the 13-nation European Space Agency that the country would become a leading contributor to Columbus, an orbiting laboratory that would plug into the core of the American-built station planned for the mid-1990s. The prime minister’s July decision was followed quickly by the resignation of the country’s top space official, Roy Gibson. The actions have led to fears within NASA that it will prove difficult to reach an agreement on the space station without British support for the project, which also involves contributions from Japan and Canada. The space station is meant...

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