The Economic Impact of the UK Film Industry - BFI - British Film ...

Economic Contribution of the UK Film Industry
July 2007
fiscal support available in the Czech Republic) the costs of producing films in the US were over 30%
higher than in the UK, while Czech costs were 12-13% lower.
We have extended these competitiveness comparisons by projecting the estimates of cost differentials in
2005 both back over time and forwards to 2010 using Oxford Economics’ global forecasts. Our
projections are based on the following assumptions:
• Production costs in each country are projected on the basis of indicators of average earnings for each
country. In the UK, we have used the ONS series for average earnings in the private service sector
rather than more specific data for earnings in the film industry, as the latter are very volatile from yearto-year
reflecting the small size of the data sample on which they are based. For the US, we have
used data for average earnings in the motion picture and video production industry. For the Czech
Republic, we have used data for average wages in the recreational, cultural and sporting activities
sector. Tests suggest that our results are not particularly sensitive to the use of alternative earnings
measures.
• US film costs are assumed to have moved historically in proportion to US average earnings. For the
UK, we assume film budgets involve 90% UK costs and 10% US costs. For the Czech Republic, we
assume 38% of the budget is spent locally, 50% reflects US costs and 12% reflects UK costs. These
proportions reflect the mix of local and non-local costs in the UK Film Council’s model of film costs by
country.
• Movements in exchange rates over time.
• Changes in the value of film tax incentives as a proportion of the production budget for UK films.
Chart 11.1 Chart 11.2
UK-US relative film costs and UK's share of
global MPAA film production
%
20
18
16
14
12
10
8
6
4
2
UK share of global MPAA film production
(LHS)
UK costs as a % of
US costs, post-tax
(RHS, inverted
scale)
0
1993 1995 1997 1999 2001 2003 2005 2007 2009
Source : Oxford Economics
UK-Czech relative film costs and UK's share of
global MPAA film production
0
1993 1995 1997 1999 2001 2003 2005 2007 2009
Source : Oxford Economics
Charts 11.1 and 11.2 show the relationship between the measures of post-tax cost competitiveness we
%
-60
-50
-40
-30
-20
-10
0
%
20
18
16
14
12
10
8
6
4
2
UK costs as a % of
Czech costs, posttax
(RHS, inverted
scale)
UK share of global MPAA
film production (LHS)
%
69
-10
-5
0
5
10
15
20
25