The number of video game developers in the UK is down almost a tenth in the past two years, with the industry body complaining that the country is at a "competitive disadvantage".
Trade association Tiga has published figures that show 9,900 gaming development staff were employed in Britain in July 2008. That had fallen to 9,010 at the end of last month.
Tiga's chief executive Richard Wilson said: "At a time when the global video game industry is growing, the UK development workforce is declining."
He said the critical reason for the decline was the UK's uncompetitive tax regime, which saw talented developers move to more favourable locations such as Canada. The industry was shocked by the Government U-turn on a tax relief in the June Budget, as Culture Minister Ed Vaizey had pledged to support it.