As expected, 2005 wasn't abanner year for UK film production as film tax breaks uncertainty and a strong pound hurtthe industry. According to figures from the UK Film Council, film productionspending in the UK was £559m ($988m) in 2005, down 31% from 2004's £810.3m ($1432m). That'sfar below 2003's record year of £1.16bn ($2.05bn).

During 2005, the UK was involved in the production of 123 features, downfrom 132 in 2004. That includes 37 indigenous films, 25 inward investmentfilms, and 61 co-productions. Those figures only include films with budgets of£500,000 ($883,824) or more.

Most damagingly, inward investment from Hollywoodfell to £312.01m ($551.3m) (43% lower than 2004's £548.49m ($969.3m) )Hollywood productions shooting in the UK in 2005 included The Da Vinci Code, V for Vendetta, and Basic Instinct 2.

If there is a silver lining to the numbers, it's thatindigenous UK production spending rose 36% to £159.84m ( $282.48m) in 37 films (upfrom 2004's 27 films). British films shot in 2005 include Anthony Minghella's Breaking and Entering, Richard Eyre's Noteson a Scandal, and Geoffrey Sax's Stormbreaker.

Local films performed well theatrically during 2005,taking 34% of UK box-office gross, the highest level in 10 years and up from 2004's 23%.Although it must be noted that the Film Council's tally of UK films includes USco-productions such as Harry Potter andthe Goblet of Fire, Batman Begins, Charlie and theChocolate Factory, and Pride & Prejudice.

"2005 was always going to be a tough year forproduction in the UK, due to the overhaul of tax incentives for film and a strong Britishpound against the US dollar," explained British Film Commissioner SteveNorris."The global marketplace for film production is more competitivethan ever before and these factors undoubtedly had an effect on inwardinvestment levels."

He said that the UK government's December announcement of a new taxcredit should bring stability in 2006 and beyond. "2006 offers a great deal ofpromise for the industry. Our competitiveness is back and we have a new taxcredit system which will give the industry real certainty. With new financingarrangements, the UK will continue to produce great independent British films as well asattracting more big budget productions to the UK."

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