Surge in value of sterling threatens investment in UK film production

The boom in British film-making and the drive to encourage more City firms to back UK productions could be threatened by this year's surge in the value of the pound, according to industry experts.

Premila Hoon, from the merchant bankers Guinness Mahon, an adviser to many film-makers and backers, said the slump in the pound in the mid-1990s was the main spur to foreign investment in production capacity.

But she warned that the fate of the UK's film-making base remained precarious.

Just pounds 700m a year is invested in film production, less than the average pounds 1bn budget of each of the big US studio and distribution groups.

Ms Hoon said the recent increase in the pound had already deterred foreign film-makers from using UK facilities. "There aren't any big films out there on the horizon. British studios have less big films in the pipeline."

Film finance experts also warned yesterday that the lack of a UK-owned distribution network with the power to encourage cinemas to show lower- budget movies remained the principal barrier to the growth of the domestic industry. Film-makers use distribution deals as collateral to persuade banks to lend money, but the UK lacks a single large distribution company.

British box office successes such as The Full Monty and Four Weddings and a Funeral managed to break through the distribution barrier but many more films never make it to the cinemas.

Ms Hoon said: "The question is whether the improvement will continue. I don't think it will unless there's a sustained investment in distribution."