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Britain Enjoys Production Boom But Faces Challenges

Last year, movie production spend in Britain reached a record £1.6 billion ($2 billion), while bigger-budget TV series added a further £726 million ($906 million). But as the country approaches Brexit (its exit from the European Union), and President Donald Trump ramps up his protectionist rhetoric, can the Brits sustain this shooting spree?

Some 85% of the U.K. movie production spend was funded from outside the country, and 66% of the high-end TV shows. About 67% of the films were Hollywood projects, representing roughly 25% of total Hollywood movie production spend, according to the British Film Institute. What brought them to Britain’s shores?

As well as the tax incentive worth 25% of the U.K. spend, Stan McCoy, the Motion Picture Assn. of America’s European chief, points to the “fantastic physical and human infrastructure, well-trained film and television professionals, who are at the cutting edge of their industry.”

One area of concern is that spending on independent British films fell 8% last year to £206 million ($257 million), 13% of the total.

Tracey Seaward, producer of Stephen Frears’ “Florence Foster Jenkins,” says that the influx of Hollywood movies and high-end television shows has squeezed independent films. “If you are making a lower-budget independent movie it is very difficult to find studio space you can afford,” she says. “It has an impact on every aspect of the industry – crew rates, equipment rental, facilities, location costs… everything is incrementally more expensive.”

Tom Avison, head of studios at 3 Mills Studios, a production facility that caters to many independent movies, says that the decline of U.K. indie movies reflects consumers’ migration toward watching high-end television drama, such as “The Night Manager” and “The Crown,” which many U.K. production companies are benefiting from.

Iain Smith, chair of the British Film Commission and producer on “Mad Max: Fury Road,” welcomes the influx of foreign-funded movies, but warns: “We have to be careful not to develop that to the extent that we don’t look after the indigenous industry. We have to find ways of bridging across from this muscularity we have in the inward-investment sector so that it somehow enhances the ability of our people to make their own content.”

The Hollywood studios are concerned too. “We value very much the fact that both studios and the indies share the same ecosystem: one talent pool, one pool of skilled workers and one surrounding set of legal protections,” McCoy says. “So the success of the whole sector is really bound together.”

Another concern is that if Britain leaves the E.U.’s media funding program Creative Europe that will hit the U.K. indie sector hardest. Creative Europe contributes Euros 20 million ($21.6 million) a year to the U.K. creative sector, but “it is not just the money because there are also all the [pan-European] partnerships that are created,” says Stephen Bristow, head of business development — film and TV at accounting firm Saffery Champness.

Amanda Nevill, CEO of the British Film Institute, says that the lower-budget British films are important as they are the “incubators” for emerging talent, but she argues that it is misleading to draw a sharp distinction between those pictures financed from outside Britain, and the locally-financed pics. She sees a third group of “fusion” movies that are foreign financed but have substantial U.K. creative input, such as “Fantastic Beasts and Where to Find Them.”

“In terms of the growth of what I would call the fusion work it is really exciting because we are seeing greater investment into the U.K. and we are finding a way as a country to be a major global player – not just in the craft skills that we provide but also in the more cerebral and leadership scenarios,” Nevill says.

Looking forward at the Brexit negotiations, one concern is whether the anti-immigration sentiment that helped drive Brexit will lead to a clampdown on foreign production staff working in the U.K. “Again and again every project in this business teaches you that it takes a lot of diverse people from different countries and backgrounds to make a great film,” McCoy says.

Another danger lies in the protectionist impulses of President Trump. “We may see him respond to the runaway productions,” Smith says. “The question is whether he is willing to create tax inducements to get [the Hollywood studios] to stay in the U.S. It’s unlikely to happen, but we’ve got to watch it carefully.”

The post Brexit world does offer the U.K. opportunities to enhance its production incentives, Bristow says. The country will be free of the E.U.’s “state aid” rules that dictate how production incentives are structured. For example, the U.K.’s tax relief can only be applied to 80% of the budget now, but that could be lifted post Brexit.

McCoy expresses the hope that Britain will continue to be engaged with E.U. policy-making, especially the E.U.’s Digital Single Market strategy that threatens “an erosion of the ability to license rights on a territory by territory basis,” he says. “From that standpoint, it is very important that the U.K. remains at the table alongside European film and TV producers in calling for an approach that preserves value for all of us.”

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