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

Economic Contribution of the UK Film Industry
July 2007
… with the Film Tax Relief vital to maintaining the competitiveness of the core UK film
industry…
• Competition to attract film producers to shoot their film in a particular country is fierce. This
competition partly focuses on the physical attributes of a country; the costs for labour and the renting
of locations and sets; and the relative skills of the film production workforce. But a key element is tax
competition.
• 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.
…facilitating £1.3 billion a year of GDP that would be lost with no tax credit
• The importance of the Film Tax Relief to supporting the continued success of the core UK film industry
is clear when we consider how UK competitiveness would be affected if there were no tax incentives
from 2008 onwards. In this case, the UK’s cost advantage vis-à-vis the US would fall to 15%. And
UK film costs would be almost 25% higher than those in the Czech Republic over the remainder of the
decade.
• We estimate that this loss of competitiveness would reduce the UK’s share of global film production by
around 9% points by 2010, to around 2%. That would be equivalent to a loss of inward investment of
about £650 million a year by 2010. In addition, investment in domestic production and co-productions
would also be seriously undermined. Overall UK film production might be reduced by 75% by the
abolition of the Film Tax Relief.
• A decline in film production of that scale would have substantial economic effects:
It would reduce the direct contribution of the core UK film industry to GDP by about £1.1 billion
and by £2.25 billion taking account of impacts on the supply chain and on the spending of workers
who lose their jobs. Similarly, employment in the core UK film industry would be expected to fall
by around 25,000 jobs directly and 50,000 taking account of multiplier effects.
While many of those currently working in the core UK film industry would find jobs elsewhere and
so continue to pay taxes, our research suggests that perhaps one-quarter of the most highly
skilled would move overseas to be based in or near film production centres. As a result, UK GDP
would be directly reduced by around £200 million a year.
Over time, tourism and exports would be undermined as they lose the promotional support
provided by UK films.
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