U.K. production spend falls for second year

But strong dollar is expected to boost activity in 2009

LONDON -- Currency fluctuations, the WGA strike and improved U.S. tax incentives contributed to a hefty downturn in U.K. production spending in 2008, according to the U.K. Film Council.

Production spending fell to 578.2 million pounds ($806.4 million) last year, off a sharp 23% from 2007, and Film Council boss John Woodward predicts yet more pain for the British indie sector.

"We will begin to see the full effects of the economic situation take their toll on independent British movies; it's going to be even harder for these types of films to raise credit, especially through bank loans," Woodward said. "Therefore, the Lottery funding that the U.K. Film Council provides will become even more important, as will the (U.K.) tax credit and support from broadcasters such as Channel 4 and the BBC."

Inward investment from international filmmakers, including Hollywood studio productions shot in the U.K., also fell, slumping 35% to bring 338 million pounds ($471 million) into the British economy in 2008.

But the Council said the outlook for inward investment this year is rosier because of an "upturn in the exchange rate, which is further enhancing the U.K.'s competitiveness and encouraging the U.S. studios to bring more work to the U.K."

The U.K. was involved in 20 co-productions last year, down from 28 in 2007, with a total British expenditure on those films of 48 million pounds ($67 million), down 35% from the previous year.

Woodward said the U.K. tax credit system remains "absolutely vital in keeping us competitive and helping to bring more than 330 million pounds ($460 million) in foreign investment into our economy."

Overall, council data show the U.K. was involved in production of 111 feature films last year, down from 126 in 2007. The 2008 tally included 66 U.K. features, down two from the previous year, and last year's local spend of 192 million pounds ($268 million) on U.K. features marked a 22% rise from 158 million pounds in 2007.

Inward-investment films last year included Mike Newell's "Prince of Persia: The Sands of Time," Marc Forster's "Quantum of Solace," Joe Johnston's "The Wolf Man," Rob Marshall's "Nine" and Wes Anderson's "Fantastic Mr. Fox."

U.K. titles in 2008 included Richard Curtis' "The Boat That Rocked," Paul Greengrass' "Green Zone," Oliver Parker's "Dorian Gray" and Stephen Poliakoff's "1939."

The Council also reported a strong year at the U.K. boxoffice with 949.5 million pounds ($1.3 billion) in ticket sales, up 5% from 2007. Market share for British films hit 31% in 2008, up from 28% the previous year and the second-highest tally since records have been kept.