Confirming the worst fears of anyone in the UK struggling to get a film off the ground, local production levels have collapsed this year by almost 40%.

The crash exacerbates last year's 57% slump in inward investment from overseas productions shooting. However, as Screen International reveals in this week's UK Focus edition, the collapse this year centres on indigenous productions.

In stark contrast to last year, when local production levels held their own, the overall number of UK productions fell 38.7%, according to Screen International's research. The first three quarters of the year saw only 38 starts, a massive fall from the 62 shoots during the same period in 2001.

The biggest hope is in the production funds being spawned by UK tax breaks. But deals such as Ingenious financing 35% of Pathe Pictures' three-picture slate are only starting to kick in.

Hardest hit were UK and US collaborations, which fell by more than 44%. With US buyers now typically providing only 25% of budgets compared to 50% a few years ago, the number of productions fell from 18 to only 10, including Working Title Films' Rowan Atkinson spy spoof Johnny English and FilmFour and Southfork Pictures' Che Guevara story The Motorcycle Diaries.

UK-driven titles also suffered, dropping 40% from 23 films to 14, including cricket comedy Wondrous Oblivion and Roger Michell's low-budget The Mother. Along with cut backs at FilmFour, Granada and Sky Pictures, changes in this year's budget - stamping out the much abused system of claiming tax relief on deferrals - seems to have hit home.

Ironically, given the pay-TV crisis across Europe, the only films to stand up were UK collaborations with the continent. The number of UK-European films fell from 16 to 13.

There was a stark lack of large-scale fare across the board, meaning a handful of productions such as Johnny English, Love, Actually and Bond Die Another Day will account for the bulk of production volume in terms of budgets.

According to six-month figures from UK support body the Film Council, the volume of indigenous production in terms of overall budgets was $115m (£72. 4m), down from $165.1m (£106.79m) in the same period last year.

"The independent production community is going through an appalling time," said Chris Auty, head of Civilian Content, which owns lottery franchise The Film Consortium. "It is a crisis of confidence as much as anything else'One of the more depressing aspects of the whole situation is that it underlines the fragility of the movie business - or at least its exposure to intangibles like confidence."

But, although it will be little comfort for anyone out of work, the fall in production numbers is seen as the end of a boom that many believed was always unsustainable. Estimates put total production volume for the year, including inward investment and local films, at around $695.8m (£450m), a massive fall from 2000's record-breaking $1.2bn (£751m) but a return to the pre-boom levels of 1997 and 1998. Those years were still markedly more healthy than the early 90s, the last time the UK industry went into recession.

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