The two films will be made in New Zealand after two days of emergency talks between studio chief and the country’s Prime Minister

New Zealand president John Key has confirmed that Peter Jackson’s The Hobbit will shoot in New Zealand.

The announcement follows two days of emergency talks between New Line and Warner Bros executives and the country’s Prime Minister John Key. The studios had threatened to move production of the two films to Europe after New Zealand’s Actors’ Equity threatened to boycott the films in a row over wages.

In a statement, Key said: “I am delighted we have achieved this result. Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of the Lord of the Rings trilogy in once again promoting New Zealand on the world stage.”

The government also confirmed that the film would receive an additional rebate of up to $7.5 million for each of the Hobbit films, and that it would offset $10m in Warner Bros.’ marketing costs as part of a “strategic partnership” with the studio to “promote New Zealand as both a film production and tourism destination.”

Key said that the changes would also be made to the country’s labour laws to recognise the difference between a contract worker and a movie production employee. Meanwhile, he also announced an expansion of New Zealand’s film subsidy, providing a tax rebate thought to be worth $25m. He added the changes aimed to give producers the necessary confidence to bring productions in the country.