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

Economic Contribution of the UK Film Industry
July 2007
have developed and the UK’s share of global MPAA film production. While there are clearly a number of
factors that influence the decision of studios over where to locate production for particular films, the charts
do suggest that costs factors play an important role. For example:
• The upward trend in the UK’s production share in the early 1990s coincided with a period of improving
competitiveness, which was then followed by a period when UK costs rose relatively strongly and the
UK’s production share fell back.
• The Section 42 tax incentives helped to improve UK competitiveness in the late 1990s/early 2000s,
and this was followed by the sharp rise in the UK’s production share in 2003/4.
• A combination of reduced incentives via Section 42, the marked appreciation of sterling vis-à-vis the
dollar and uncertainty over the future of film tax incentives in the UK served to undermine the UK’s
competitiveness severely. That was associated with a marked fall in the UK’s share of global film
production in 2004 and 2005.
• More recently, film production has recovered in the UK, supported by the new Film Tax Relief.
Taking account of the incentives provided by the new Film Tax Relief, our estimates show that the costs of
producing a film in the UK are set to fall relative to those in its competitors over the rest of the decade, so
that by 2010 UK film costs are expected to be around 27% lower than those in the US and only 7% higher
than those in the Czech Republic. On this basis, we expect the core UK film industry to attract around
11% of global film production over the period to 2010, with spend on inward investment productions rising
to about £800 million by 2010. This should underpin a continuation of the long-term trend expansion seen
in the core UK film industry.
%
20
18
16
14
12
10
8
6
4
2
Chart 11.3 Chart 11.4
UK-US relative film costs and UK's share of
global MPAA film production - no tax credit
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 200
Source : Oxford Economics
UK-Czech relative film costs and UK's share of
global MPAA film production - no tax credit
%
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)
0
1993 1995 1997 1999 2001 2003 2005 2007 2009
Source : Oxford Economics
%
-10
-5
0
5
10
15
20
25
70