Inward investment from overseas productions shooting in the UK collapsed last year by 57%, according to figures released by the British Film Commission.
The commission, responsible for attracting US productions to the UK, said that inward investment plummeted from£539.44m ($771.6m) in 2000 to£230.46m ($329.6m) in 2001.
"The key factor for this downturn in investment was the threat of the possible lengthy strike action by the Screen Actors Guild in the US earlier in the year," the commission said. "Many US productions were postponed or cancelled with a significant effect to the UK production industry, where 70% plus of its activity is derived from the US."
UK production held up well with the overall level of film production - including overseas and local films - dropping from the previous record levels in 2000 of£750m ($1.1bn) to£410.58m ($587.1m). That marks a drop from some£210m ($300.3m) in 2000 to around£180m ($257.3m) in 2001.
The commission calculates that 90 productions with budgets in excess of£1m ($1.4m) were shot in the UK. Of these, 39 were productions from overseas bringing inward investment, including films such as The Hours, Below and Gosford Park. Amongst the biggest were Spy Game and the second Potter, Harry Potter And The Chamber Of Secrets.
The commission also noted a rise in the number of Indian films shooting in the UK, citing productions such as Kyo Kii Main Jhuth Nahin Bolta and Is Pyaar Ky Kya Naam Doon.
Steve Norris, the British Film Commissioner, added that the current strike by UK actors union Equity was now making the situation worse.
"Whilst we should have every reason to be optimistic for the coming year, it is the view of the Commission that the current dispute between producers in Britain and the actors union Equity remains a insurmountable obstacle to persuading the US that the UK continues to be a viable option for the production of mainstream Hollywood films. Despite nearly a decade of sustained growth (some 800%+ in 9 years), it is unlikely that we will see rising levels of production until this matter is resolved."