The investment by Hollywood productions shooting in the UK has plummeted by more than 65%, according to figures from the British Film Commission. The total value of overseas productions to start shooting in the UK in the first six months of 2001 crashed to $109m as UK studio facilities were hit by the threatened US actors' strike and, it seems, rising international competition.

In the same period last year, big-spending productions such as the $100m The Mummy Returns and the $120m TV mini-series Band Of Brothers drove inward production levels to $320m.

By contrast, productions which started shooting this year were relatively low budget. Miramax Films' Below shot on a budget of $40m, while Stephen Daldry's The Hours, with Nicole Kidman, Julianne Moore, Meryl Streep and Claire Danes, cost $22.8m.(All budgets for individual productions are sourced from Screen International, not the British Film Commission).

Significantly, the commission's figures do not include mega-budget pictures Harry Potter (pictured) and Spy Game running over from a production start at the end of last year.

But delays and disruption caused by the threatened actors' strike means that production levels could get worse before they get better. July and August seem to have been particularly grim for the studios, with few productions ready to step in once projects wrapped in May and June to beat the threatened strike.

"There's been a hiatus because nothing was going into pre-production because of SAG," says Shepperton's assistant studio manager David Godfrey. "Everybody put their projects through at the start of the year. The UK has lost a lot of production that would have gone into production from February onwards but didn't because of SAG".

Although the second Harry Potter will boost second half figures when it goes this autumn at Leavesden, some predict that a more widespread upturn is unlikely until at least the New Year. They point out that large-scale productions can take months to get ready to shoot even once the prospect of a strike has vanished.

"In terms of the inward investment projects, it is very slow," said Sue Hayes, film commissioner, London Film Commission. "Several projects have been cancelled and others are no longer in pre-production - they are back in development."

While studio chiefs were putting the slump down to strike fears, growing competition from overseas studios presents a more worrying, longer term threat. Pinewood-Shepperton chairman Michael Grade cited increasing rivalry from countries such as Australia, the Czech Republic, Spain and Canada as a factor behind the merger of the UK's two biggest studios in February.

The bright spot for this year's production levels has so far proved to be home-grown productions and co-productions, which appear to have at least partly cushioned the impact of falling inward investment. According to Screen International's half-year round-up of local and overseas feature production, the overall volume of films starting in the first six months was down only slightly. Including both UK and US productions, production levels hit $455m. During the same period last year, it was at $479m.

Intermedia led the pack of UK-based companies with Phillip Noyce's $30m The Quiet American and Paul Anderson's $40m Resident Evil, in partnership with Germany's Constantin. However, while the titles boosted overall production levels, they were of little benefit to UK studios as both shot overseas.

FilmFour was close behind in terms of overall volume with productions such as Charlotte Gray, Death To Smoochy, Miranda, It's All About Love and Gerry going before the cameras. Gerry and It's All About Love shot in the US.

Working Title Films this year shot the $20m About A Boy, with Hugh Grant, and the $4m Ali G Movie. The production company was also behind the $20m The Guru, starring Marisa Tomei, Heather Graham and Jimi Mistry, which shot in New York and India.

Even if it did not always help UK studio facilities, the strong showing from local production testifies to the ambition of UK companies aiming to make bigger-budget, commercially-oriented pictures. National Lottery franchise DNA Films is one of the outfits raising budget levels with projects such as Danny Boyle's UK sci-fi, 28 Days Later.

"We need more companies like Working Title," said DNA co-chief Duncan Kenworthy. "It only happens over a time, but that is one thing our franchise is trying to do."

The UK studios will be hoping that, now the threat of a SAG strike is lifted, the weakness of the pound against the dollar will help attract US productions. The current exchange rate of 1.4 is well under the 1.7 threshold below which the UK is seen as competitive.

Outwardly at least, the studios remain optimistic about the speed in which production levels can recover. "Now that the SAG issues are behind us, there's been an encouraging level of pickups," says Ivan Dunleavy, chief executive of Pinewood and Shepperton Studios. "Now that we see productions coming back into the development stage I would expect us to be back to normal levels [this year]."

Leon Forde in London contributed to this report.