As Keira Knightley gazes out from hundreds of posters across the country advertising the local-grown hit Pride and Prejudice, the casual observer could be forgiven for thinking the British film industry is booming.
But the star-studded remake of the Jane Austen classic is fast becoming an anomaly.
While Knightley and her co-stars spent months filming on location in England, other major film productions, including the Roman Polanski-directed Oliver Twist -- and potentially, future installments of both the Harry Potter and James Bond series -- have decamped overseas amid wrangling over the tax system and spiraling costs.
A report commissioned by the UK Film Council this month found that industry jobs dropped 20 percent last year and predicted that investment would fall to US$570 million, down 70 percent from last year.
More movies shot elsewhere would have a devastating effect on a sector that contributes about US$5.5 billion annually to Britain's gross domestic product, it added.
Tourism officials, who estimate that around one-fifth of the 28 million people who come to Britain each year do so after seeing the country depicted on screen, are also worried. The report suggests that up to US$2.8 billion of tourism spending is linked to films shot here.
``A good film in a great location not only brings in money during actual filming here, but people are inspired to visit when they see it in cinemas and for years afterward as it is distributed on DVD and video,'' said Elliott Frisby, spokesman for the VisitBritain group.
The film industry's troubles began last year when the government cracked down on programs that allowed tax losses claimed by film backers to exceed the initial capital invested. Closing a loophole that allowed some producers to claim tax relief twice for the same production caused chaos for several films already being shot.
The government is consulting the industry about a new tax credit system due to start in April, but many are concerned about a likely decline in the tax relief available. Analysts predict that Hollywood films shot in Britain would qualify for a tax break of as little as 2 percent of their budgets, compared with around 9 percent now.
Pinewood Shepperton, owner of Britain's premier soundstages and home of superspy James Bond, says the ambiguous outlook has prompted major studios to defer bookings or shift production elsewhere.
Pinewood was counting on two new studios, including an underwater venue, to keep it an attractive option for large-scale productions.
But it is currently hosting just two major Hollywood films -- the Da Vinci Code starring Tom Hanks and Basic Instinct 2 -- and Sony Pictures has done little to dispel rumors it is considering using Prague not just for location work but as the main base for the next Bond film Casino Royale.
The Czech capital has proved the most popular choice for producers looking to conserve budgets and recreate a piece of England abroad.
As well as Oliver Twist, the city has provided the backdrop for other quintessentially British stories including the Jack the Ripper yarn From Hell, the Dracula tale Van Helsing and the comic adaptation The League of Extraordinary Gentlemen.
``There's no other place in the world where ... we could build a 19th-century London and shoot in it for months,'' Polanski said of his shoot.
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