The UK film industry contributed about $8.9bn (£4.3bn) to the UK's gross domestic product in 2006 - a 39% increase in two years, according to a new Oxford Economics report supported by The UK Film Council and Pinewood Shepperton.

That figure represents direct impact from core film activities such as production and distribution (directly contributing about $3.08bn (£1.5bn) per year to the GDP) and also indirect financial boosts such as the film industry supporting other sectors, related merchandising, and encouraging trade & tourism.

The film business also makes direct capital investments in the UK, with $247m (£120m) of investment made in 2006 and $1.3bn (£635m) made in infrastructure and new technology since 2000.

Oxford Economics predicts that for the period until 2010, the UK is expected to attract about 11% of the global film production, with inward investment rising to about $1.6bn (£800m) by 2010.

'The UK is in a really, really good position right now to make movies,' John Woodward, CEO of the Film Council, said at an unveiling of the report's findings. 'For the first time in a long time the British film industry seems to be firing on all cylinders.'

Without the new film tax relief that is now in effect, the researchers estimate that the UK would only attract about 2% of production and could lose up to 25% of skilled film workers who seek work overseas. With no tax incentive in place, Oxford Economics predicts that overall UK film production would fall 75%.

Researchers said that the new film tax relief will cost the UK government about $247m (£120m) per year, and that without the new tax system, the Exchequer would lose out on $720m (£350m) per year, and the economy would see a direct $2.67bn (£1.3bn) loss in GDP per year.

The UK Film Council couldn't specify the number of applications or approvals under the new tax relief system, nor what percentage were co-productions or Hollywood studio inward investment projects.

The study said that the UK film industry employs about 33,500 people directly in the UK (the large majority in the production sector), similar to the size of the UK book publishing industry. Two-thirds of companies working in film also work in other screen sectors, including TV.

Based on the theory that every film industry job supports other jobs, the film world supports 95,000 jobs in total.

Among other tangential economic support, 1 in 10 overseas tourists to the UK are estimated to be inspired attracted to the country as a result of seeing the UK on film, worth $1.85bn (£900m) to the UK GDP.

Pinewood Shepperton chief executive Ivan Dunleavy said that UK studios were seen as competitive, despite the strong pound, with a number of productions lured here instead of to cheaper locales such as Eastern Europe.

Furthermore, the study finds 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.'

Woodward added: 'We're more or less heading to capacity in the UK. It's not as if studios are empty. If we carry on, we're going to have the nice problem that Britain is going to have to worry about being too full in a year or two.'