Report finds more money, jobs flowing into economy
LONDON — The U.K. film industry contributed more than £4.6 billion ($7.5 billion) to the U.K.’s gross domestic product and over $2.1 billion in tax revenue in 2011, according to an independent report published today.
Commissioned by the British Film Institute and Pinewood Shepperton, “The Economic Impact of the U.K. Film Industry in 2011” report is researched and published by Oxford Economics and updated every two years.
“This report clearly highlights the huge contribution that the U.K. film industry makes to longterm economic growth,” said creative industries minister Ed Vaizey. “It reminds us of the crucial role the industry plays in job creation, tourism, inward investment and the promotion of all that is great about Britain.”
Inward investment generated a record $6 billion and $1.6 billion in tax revenues. Production spend from inward investment accounted for 80% of the money spent on U.K. production in 2011.
Blighty’s film industry directly employs 43,900 people, up from 36,000 in 2009. In total the industry supports 117,400 direct and indirect jobs, rising from 100,000 in 2009.
The report shows that films depicting U.K. settings, characters and culture generate 10% of tourism revenues, meaning some $3.4 billion of visitor spending per year is attributable to U.K. film. This, is turn, contributes $1.6 billion to U.K. GDP.
“The trends show that we’re performing well, relative to today’s economic climate. We can do more though,” said Pinewood Shepperton CEO Ivan Dunleavy. “We need to look at how to enable further investment in infrastructure and how to build on the U.K.’s growing international reputation to boost exports. By making gains in these areas film can provide more jobs and help play our part in bringing growth to the U.K. economy.”
The report also highlights the importance of the U.K.’s film tax relief, introduced in 2007, in keeping Blighty’s film production sector competitive globally.
It estimates production would be 71% smaller without the relief.
The report states: “We estimate that the loss of film tax relief would reduce the U.K. share of global film production by around 6% to 2% by 2015. This would be equivalent to a loss of inward investment of $908 million per year by 2015.”
A decline in film production of 71%, a figure which includes reduced indigenous productions also supported by the relief, would cut the contribution of the U.K. film industry to GDP by approximately $1.95 billion and by $3.9 billion taking into account the impact on the supply chain and on the spending of workers who would lose their jobs. Employment in the core U.K. film industry could expect to fall by 27,600 jobs and by 55,200 taking into account multiplier effects.
The film tax relief costs the Treasury approximately $185 million each year, generating $19.46 in GDP for every $1.62 invested.
The report also asserts that, thanks to the relief, the cost of producing a film in Blighty has fallen relative to those in other countries. In 2012 U.K. film costs are 38% lower than those in the U.S. and 10% below production costs in South Africa. The depreciation of sterling since 2008 has also been a contributing factor to this.
“With film tax relief in place, we expect the core U.K. film industry to continue to attract around 8% of global film production over the period to 2015, with spend on inward investment productions betterings its record 2011 level,” the report states.