The European film industry is heavily dependent on state support. Without production incentives such as direct subsidies and tax shelters European film would not make it to most screens in the UK due to the economic srength of US film studios.

On Tuesday government announced that it would provide further tax credits for filmmakers to replace existing tax relieves which enable domestic filmmaking and co-productions with foreign film producers (�Section 48 and 42�).

After a long time of uncertainty about the renewal of the tax break that saw film production levels in the UK decrease significantly this is a good sign for the UK sector. However, while the Treasury will be embarking on a long phase of re-designing the currently existing tax break the industry is left in a state of anxiety.
- Government has to close a number of loopholes which led to abuse of the current system
- Questions such as national spend requirements regarding co-productions � which are essential for the economic well-being of the UK film industry � and budget caps which make or break the success of tax incentives for film, need to be rethought.

One reason for this anxiety is that US producers may decide to shoot their films in low labour cost countries, such as Hungary, which also have in place competitive tax breaks that provide more certainty about the future.

In the long run, to ensure that the UK remains a first choice country for international productions, direct support for UK film will become even more important. Only artistic and technical talent will continue to attract major international film productions as producing a film in Eastern Europe or Asia will be much less expensive.

The Charter Review�s call for more BBC support of UK film (in my viewpoint) therefore goes into the right direction as it will equip UK film makers with the skills and talent to service large international productions. And eventually, UK film might even become a sustainable undertaking.