The UK Film Industry in 2025-26: Current State and 12-Month Outlook

Introduction

The United Kingdom’s film industry is navigating a complex post-Brexit, post-pandemic landscape shaped by unprecedented global events. Inward investment has surged in recent years – the UK became a prime location for Hollywood studios and streaming platforms – but growth has been tempered by new challenges. Trump-era trade tensions and the prospect of renewed tariffs, shifting UK-EU relations after Brexit, and broader geopolitical developments (from war to global inflation) are reshaping the industry’s outlook. This report examines the current state of all major segments of the UK film industry (production, distribution, exhibition, independent and studio sectors, international co-productions, and streaming) and provides a 12-month forecast through summer 2026. We analyze how trade policies (including Trump-era and post-Trump tariffs), Brexit, and current global market dynamics (Hollywood strikes, investment trends, “streaming wars,”etc.) are influencing the UK’s film economy. Key metrics and forecasts are summarized in tables for clarity, and recent policy changes are highlighted.

Production Trends and Studio Occupancy

A Post-Pandemic Production Boom and Correction: The UK experienced an extraordinary boom in film and high-end TV production in the early 2020s, fueled by generous tax incentives and insatiable demand from streaming giants. Production spending hit a record £6.27 billion in 2022, with major international franchises (from James Bond to Star Wars) and streamer-backed series choosing UK studios. This “Brollywood” boom was driven by a collision of factors: lucrative tax breaks, a streaming content arms race, and world-class UK crews and facilities. By 2022 the UK had 6.9 million sq ft of soundstage space (1 million added in that year alone), and global companies raced to lock in studio leases. Netflix doubled its presence at Shepperton Studios and spent about $1 billion (≈£740 million) on 60 UK productions in 2020, while Disney leased large portions of Pinewood Studios. The boom strained capacity – at its peak, crew and equipment shortages were reported as studios ran at full tilt.

Cooling Off in 2023-24: This rapid expansion hit headwinds in 2023. A convergence of factors – a pullback in streamer spending, rising interest rates, and the Hollywood writers’ and actors’ strikes of 2023 – caused a sharp dip in production activity. The “seemingly endless streaming money” that had funded massive content output began to recede as platforms like Netflix, Disney+ and Amazon became more profit-focused and curtailed original drama commissions. The impact was dramatic: according to the BFI, UK film and high-end TV production spend in 2023 fell to £4.23 billion, down 32% from the £6.3 billion record in 2022. The number of films and high-end series starting production dropped from 415 in 2022 to 394 in 2023. Major studios temporarily paused projects during the strikes, causing an “easy year to beat” slump. Real estate investors who had bankrolled new studio developments began putting expansion plans on ice amid uncertainty. By early 2024, Pinewood Group – the UK’s largest studio operator – cautioned bondholders that the pandemic-era “streamer wars” content boom would not continue at the same explosive growth rate.

Occupancy and Investment Levels: Even with the correction, UK soundstages remained in demand, and 2024 saw a partial rebound as delayed projects restarted. Industry figures show that combined UK spend on film and high-end TV climbed back to ~£5.6 billion in 2024, suggesting a resilient recovery once the Hollywood strikes ended.

Table 1 summarizes recent production spend trends:

Year	Total UK Production Spend (Film + High-End TV)	% Change
2019 (pre-pandemic)	~£3.9 billion*	–
2022 (peak boom)	£6.3 billion	+~60% vs. 2019
2023 (strike impact)	£4.2 billion	–32% vs. 2022
2024 (rebound)	£5.6 billion	+33% vs. 2023

Table 1: UK film & high-end TV production spending. 2024 figure is approximate (industry estimate). 2019 provided for baseline context.

Top facilities like Pinewood, Shepperton, Leavesden, Elstree, and new regional studios remain heavily booked by big-budget productions. In 2024, 86% of all production spend in the UK came from inward investment or co-productions (mostly US studio and streamer projects) – underlining how dependent UK crews and facilities are on global capital. Indeed, Hollywood “relies heavily on Britain” to make its blockbusters and prestige TV, from Star Wars and Marvel films to HBO and Netflix series. When that pipeline slowed in 2023, it left smaller domestic producers scrambling for studio space that had been vacated by the big players. Some planned expansions have been casualties: for example, the proposed new Winnersh Film Studios in Berkshire went into administration in 2023 amid the downturn.

Skills and Capacity Constraints: Behind the aggregate numbers, the boom-and-bust cycle has exposed structural issues. During the boom, production spend per project hit record highs as streamers poured money into lavish series and films. This strained the UK’s crew base – skills shortages became apparent, with productions sometimes struggling to hire experienced staff or secure enough equipment. Industry veterans lauded the boom for providing unprecedented job opportunities (“I’ve had a much wider choice of work… levels I’ve not seen before”), yet also cautioned that a “lack of skills training” threatened to burst the bubble. In 2023, when work abruptly slowed, many freelance crew members were left in limbo. A props company at Shepperton noted it had shrunk from 12 employees to 3, as some film techs left the industry for steadier trades during the uncertainty. Ensuring a sustainable talent pipeline is now a priority – the National Film and Television School and industry bodies are advocating for more training to avoid bottlenecks in key roles if production ramps up again.

Studio Occupancy and New Builds: Prior to the 2023 correction, investor appetite for studio real estate was sky-high. Global and local investors unveiled plans for “millions of square feet of new studio space across the country” during the streaming gold rush. Notably, Pinewood Studios (and its sister Shepperton) underwent major expansions, and new sites were announced in Dagenham, Sunderland (Crown Works), Birmingham, and Belfast, among others. By early 2023, the UK had an estimated 6.9 million sq ft of stage space. However, as 2024 unfolded, real estate interest cooled. Some projects have slowed or paused, reflecting investor caution about whether recent record demand was a temporary spike or a new normal. Industry experts note that build costs have risen (construction inflation and higher interest rates), making new speculative studio developments harder to justify unless long-term leases from streamers/studios are secured. Going forward, top-tier soundstages remain a robust asset – Pinewood’s CEO affirmed in late 2024 that global production is “ramping up following the strikes”, albeit “not returning to the [extreme] growth profile witnessed during the ‘streamer wars’”. In short, studio occupancy is expected to stay high through 2025, but with more measured growth and a focus on fully utilizing recently built stages rather than breakneck expansion.

International Trade Relations and Co-Productions

International collaboration is the lifeblood of the UK’s film sector. Thus, shifts in trade relationships and tariffs – from the Trump era to the present – as well as Brexit’s reordering of UK-EU ties, have had significant ramifications.

Trump-Era Tariffs and New Threats: During Donald Trump’s presidency (2017–2021), the global trade environment became unpredictable, though UK film largely avoided direct impact at the time. The Trump administration’s tariffs mostly targeted goods (steel, aluminum, etc.), but in 2020, Trump stunned the film world by threatening a 100% tariff on all foreign films entering the US. In a May 2020 social media post (just ahead of the Cannes festival), Trump declared he would tariff “any and all movies coming into our Country that are produced in Foreign Lands,” framing foreign films as a threat to U.S. national security. This proposal was quickly walked back by the White House, but it sent shock waves through the UK industry and Europe. Trade experts noted such a tariff would be devastating and likely self-defeating – over half of U.S.-made films’ box office comes from abroad, and a tariff war would shrink the pie for everyone. Nonetheless, the mere suggestion created “uncertainty in the market” and put the industry on edge.

In 2025, the specter of Trump-era protectionism has returned. Trump (now campaigning for or possibly holding office again) has renewed his rhetoric of “WE WANT MOVIES MADE IN AMERICA, AGAIN!” on his platform Truth Social. In May 2025, he rattled Hollywood and its overseas partners by announcing plans to implement the 100% foreign film tariff. This was received as “a proper kick in the teeth” by UK filmmakers and vendors. The owner of a props company at Shepperton expressed terror at “this new Trump thing”, fearing it could wipe out his business if U.S. studios pull productions back to American soil. A senior UK studio executive warned that, “with a single post,” Trump had made new investment in UK productions “impossible” due to market uncertainty. Hollywood’s powerful unions, meanwhile, cheered the idea of jobs “forced back to California” – though even U.S. union leaders realize a blanket tariff could shrink the overall film market, leaving everyone worse off.

Potential Impact of Tariffs: If a 100% import tariff on films were actually enacted in 2025, it would drastically realign production flows. The UK (and Canada, EU, etc.) have thrived on so-called “runaway productions” – U.S.-funded projects filming abroad – thanks to cost advantages and incentives. Those projects accounted for over 85% of UK production spending in recent years. Tariffs could cause a “total wipeout” of this work almost overnight. Industry leaders stress that such a policy is “unworkable” in practice, given the complexity of determining a film’s country of origin in a globalized production ecosystem. Would a movie shot 50% in UK and 50% in US be half-tariffed? Who pays – the distributor or the studio? “Valuing services as they cross borders is tricky,” notes European Film Academy chair Mike Downey. But even the prospect is enough to cause a freeze: studios would likely pause greenlights on UK-based projects until they know whether their $200 million production might face a 100% tax to access U.S. audiences. Indeed, in early 2025 there were reports of an “initial freeze” on some new productions heading to the UK while everyone “works out what this means”. The broader concern is that aggressive trade measures by the U.S. could trigger retaliation from other markets, fragmenting the global film trade. It’s worth noting that Trump’s trade threats aren’t limited to film – by mid-2025 he also floated steep tariffs (10–30%) on other UK exports and EU goods. All of this contributes to a climate of uncertainty.

Post-Trump Trade Environment: The Biden administration, by contrast, took a more traditional approach to trade, lifting some Trump-era tariffs on allies and engaging in negotiations. In 2022, the US and UK reached a deal to remove U.S. tariffs on UK steel and aluminum, easing tensions. However, a comprehensive US-UK free trade agreement has yet to materialize. As of 2025, the UK still faces an unpredictable U.S. trade stance due to domestic U.S. politics, and it must also navigate its post-Brexit relationship with the EU.

Brexit and UK-EU Film Relations: The UK’s exit from the EU has had a subtle but far-reaching impact on film production and distribution:

• Co-Production Treaties: On the positive side, the UK remains a party to key international frameworks that enable co-productions. Britain continued its membership in the Council of Europe’s Convention on Cinematographic Co-Production, ratifying the updated convention in 2021. This allows UK producers to officially co-produce with European (and other) partners, qualifying for national incentives as if the film were local. The UK also maintained all its bilateral co-production treaties (with countries including France, Canada, Australia, China, South Africa, etc.), which are written into UK law and unaffected by EU exit. In fact, 2023 saw a surge in UK-international co-productions – 37 co-produced films with £162.8 million UK spend, the highest co-pro volume in a decade. Big upcoming titles like Paddington in Peru (a UK-France-U.S. collaboration) exemplify this co-production momentum. Co-productions have been one strategy for UK producers to share costs and mitigate risk in a tighter financing climate.
• Mobility of Talent and Crew: Brexit ended the free movement of labor between the UK and EU. Film productions now face visa and work permit requirements when bringing European talent into the UK or sending Brits to shoot in Europe. Under the post-Brexit Trade and Cooperation Agreement, short-term visits (up to 90 days in 180) can be visa-free for certain business purposes, which helps for location shoots and film festivals. The UK also created a “Creative Worker” visa route for foreign cast/crew which has been extended to EU citizens; it requires a job offer from a sponsoring company but allows entry for specific film/TV projects. These provisions have so far prevented a worst-case talent drain – European filmmakers can still collaborate in the UK (and vice versa) with some planning. However, added bureaucracy and costs (e.g. visa fees, social security complications) have made cross-border production less frictionless than before. Industry groups continue to lobby for streamlined travel rules. There is recognition that film is a highly international business; as the BFI notes, ease of movement is vital and both the UK and EU have some allowances for short-term film work. Even so, smaller independent productions have reported difficulties, for example in touring film crews across multiple European countries now that carnets and visas are needed for kit and personnel.
• European Content Quotas: One of the most consequential Brexit issues is whether UK films and TV shows count as “European works” under EU content quotas. The EU’s Audiovisual Media Services Directive (AVMSD) requires streaming platforms and broadcasters in Europe to reserve at least 30% of their catalog for European works. Historically, UK productions qualified as European content, which benefited both UK exporters and European streamers filling quota needs. After Brexit, a debate erupted in Brussels: should “European works” exclude UK-origin content now that the UK is a third country? In mid-2021, an internal EU paper argued that British programming’s share was “disproportionate” on European screens and “a threat to Europe’s cultural diversity”. It noted British shows made up as much as one-third of the European quota on some VOD services. Countries like France pushed to strictly enforce European quotas for EU member productions, worried that post-Brexit the UK’s prolific output would crowd out content from smaller EU states. As of 2023, the European Commission was considering redefining “European works” to exclude the UK, perhaps by tying eligibility to EU single market ties or EU program membership. This move, strongly opposed by European broadcasters and even some MEPs, would put streamers in a bind – “can Netflix still hit its European quota if hits like Sherlock and Doctor Who no longer count?”. A March 2023 Politico report noted that UK content accounted for 28% of Netflix’s European catalogue investment in 2021 (more than any single EU country). Simply put, the UK has been a major supplier of “European” content. For the UK industry, losing that status would be a serious blow: it could make UK films less attractive for European acquisition (since they wouldn’t help fulfill quotas) and could reduce UK creatives’ participation in European co-financing. Industry groups have lobbied hard against exclusion; the Association of Commercial Television in Europe urged building bridges “not burning them,” emphasizing that Europe’s audiovisual community still works “hand in hand across the Channel.” As of mid-2025, UK works still technically qualify as European content by virtue of the UK’s signatory status in the Council of Europe’s TV Convention. Both the European Commission and UK government initially confirmed this interpretation. However, the risk of policy change remains – the topic is tied to wider UK-EU negotiations. The UK government may seek an associate agreement to keep its audiovisual sector closely aligned with Europe. Indeed, in April 2025 a British Parliament committee urged the government to negotiate associate membership in the EU’s Creative Europe MEDIA program, partly to shore up UK-EU screen sector ties. Protecting the “European” status of UK films is seen as “vital to the industry’s future” and a key reason to rebuild partnerships with the EU.
• Loss of EU Funding: Brexit also meant the loss of EU funding schemes that had benefitted UK film. Chief among these was Creative Europe MEDIA, which had invested millions in UK independent films, distribution, and training. The UK was a net beneficiary of Creative Europe before 2020. To fill the gap, the UK government launched a Global Screen Fund in 2021, but its scale is modest. Stakeholders describe UK replacements like the Global Screen Fund as “a step in the right direction [but] simply do not compare” – offering less funding and less international reach than EU programs did. One analysis estimates a €180+ million shortfall in creative sector funding for the UK over the EU’s 2021-27 budget period. Independent filmmakers and distributors in the UK now have to work harder to finance projects, often relying on patchworks of national and private funds without the pan-European grants they once accessed. This is making it more difficult for lower-budget UK films to secure financing and visibility – a concern flagged by BFI’s chief executive. The government has extended the Global Screen Fund (£21 million over three years) and increased some direct funding via the BFI, but industry voices are calling for a more robust strategy, including possibly rejoining EU schemes.

In summary, geopolitics and trade shifts are a double-edged sword for UK film. The country’s strong global ties have brought in huge investments (especially from the U.S.), but also leave it exposed to external policy shocks. Brexit has introduced friction with Europe but not severed ties, while U.S. protectionist moves represent a wildcard that could drastically alter the landscape. Over the next year, the UK will be carefully watching U.S. policy – a de-escalation of tariff threats or a carve-out deal for the screen industries would bring relief. Concurrently, the UK is seeking a new equilibrium with Europe, aiming to remain a central hub in the continent’s creative ecosystem even as a standalone player.

Distribution and Exhibition: Cinemas vs. Streaming

The distribution end of the film business – encompassing theatrical exhibition, home entertainment, and streaming platforms – has been transformed in recent years. The UK’s cinemas are rebounding from COVID-19’s impact, even as they face stiff competition from streaming services and changing audience habits. We analyze box office trends, the role of independent cinemas, and the continuing “streaming wars.”

Box Office Recovery and the “New Normal”: UK cinemas were hit hard by the pandemic in 2020–21, with prolonged closures and drastic attendance drops. From 176 million admissions in 2019 (a modern high), attendance plunged to just 44 million in 2020. The recovery has been gradual. By 2022, UK cinemas sold ~117 million tickets, grossing ~£980 million – about 78% of 2019’s gross. 2023 saw further improvement thanks to a strong slate (notably the “Barbenheimer” phenomenon). Total 2023 box office reached £978 million (virtually flat versus 2022) with admissions up to ~124 million. That still lagged considerably behind pre-pandemic levels. Crucially, a setback came in 2024: the Hollywood strikes delayed several major releases, creating a thinner film lineup. Research firm Omdia projects 2024 UK box office will dip to ~£931 million – the first yearly decline since the pandemic trough, entirely due to supply issues rather than audience reluctance. Cinema operators worry that every disruption makes it harder to lure back patrons: “if you don’t have a consistency in the supply of films, you lose momentum and people forget about going”. Indeed, the habit of regular moviegoing was “completely broken” in 2020, and it has required effort to rebuild.

Looking ahead, there is cautious optimism that 2025 and 2026 will finally see something close to a full recovery. Industry analysts forecast that 2025 box office will exceed £1 billion for the first time since 2019, thanks to a “wave of blockbusters” slated for release. Big franchises (the next Mission: Impossible, Avatar 3, a Superman reboot, etc.) are lined up for late 2025 into 2026. Pent-up titles delayed by the strikes will hit screens, potentially making 2025 a banner year. Omdia predicts £1.02 billion in 2025 gross, and theater owners are “excited” by pre-bookings for tentpoles like Wicked and Gladiator II (some advance ticket sales were “at Barbie levels” – extremely high). Admissions are expected to reach ~129 million in 2025, still well below 2019’s 176 million, but moving in the right direction. By 2026, cinema chains anticipate approaching pre-pandemic attendance – Vue Cinemas’ CEO suggests that “2025 [or 2026] could be the first real year to say this is where attendance is post-Covid.

 Table 2 illustrates the trajectory of UK box office and attendance, including forecasts:

Year	UK Box Office Gross	Cinema Admissions	Notes
2019	£1.25 billion	176 million	Pre-Covid benchmark (modern record)
2020	~£300 million*	44 million	Covid lockdown impact
2022	£980 million	117 million	Pandemic recovery accelerates
2023	£978 million	124 million	“Barbenheimer” boost; strong titles
2024†	£931 million	~121 million	Strikes cause content gap (forecast)
2025†	£1.02 billion	~129 million	Strong blockbuster lineup (forecast)

Table 2: UK box office and cinema attendance, with 2024–25 projections. UK&I combined figures; 2019-2023 admissions from UK Cinema Association/Comscore.

While these figures show a positive trend, cinema operators remain cautious. The industry has undergone structural changes: older audiences (a mainstay of arthouse/indie films) have been slower to return, and the release window model has shifted (more films go to streaming faster). The financial health of exhibitors is still recovering – for instance, Cineworld (the world’s 2nd-largest chain, based in the UK) went through bankruptcy restructuring in 2022-23 and downsized its UK operations to reduce debt. Odeon and Vue also undertook cost-cutting in 2020-21. The result is a leaner exhibition sector, with fewer screens in some areas and a focus on eventizing the theater experience to draw people off their sofas.

Independent Cinemas and Niche Audiences: Independent and art-house cinemas were particularly vulnerable during the pandemic, but many have shown resilience. The UK government and BFI provided emergency grants (e.g. the Culture Recovery Fund in 2020-21) to help small cinemas survive closures. In the recovery phase, specialized film programming has started to find its audience again – for example, the summer of 2023 saw surprising success for foreign-language arthouse hits among younger UK viewers. This suggests a potential new generation of cinephiles seeking diverse content on the big screen. Nonetheless, indie cinemas face ongoing challenges: the release schedules from distributors have fewer art-house titles (as studios focus on franchises and streamers often take global rights to specialty films). To adapt, many independents have diversified into event cinema (screening live theatre, concerts) and community engagement. The BFI has continued National Lottery-funded initiatives like the BFI Audience Fundand Film Exhibition Fund to support indie exhibitors and boost local film culture. In late 2023, BFI awarded £1.8m to regional film hubs to nurture indie exhibition and talent development. These efforts aim to ensure that smaller cinemas – crucial for showcasing British independent films and international festival fare – remain viable in the streaming age.

Despite such support, the economics for independent film releases are tough. According to official 2023 stats, UK independent films (i.e. UK-made films without U.S. studio backing) earned just £37.8 million at the UK box office in 2023, around 3.5% of total grosses. Independent filmmakers increasingly rely on streaming or on-demand platforms for distribution, as theatrical runs (if they happen at all) tend to be limited. The worry, as expressed by BFI’s CEO Ben Roberts, is that “lower budget UK films [are] increasingly challenged in securing finance and visibility.” This has implications upstream – if indie producers doubt they can get their film seen (or recoup costs), fewer such films will be made. The next year will be critical for UK indie cinema as stakeholders explore new models (for example, boutique streaming services for British/European film, hybrid theatrical-VOD releases, and stronger international festival presence to build buzz).

Streaming Platforms and the “Streaming Wars”: The rise of streaming has been a defining trend for both production and distribution. On the distribution side, UK consumers have embraced video-on-demand en masse: by 2022 UK households held nearly 50 million streaming subscriptions (2.7 per household on average). Giants like Netflix, Amazon Prime Video, Disney+, Apple TV+, and more recently HBO Max (via rebranding) are vying for subscribers. This “streaming wars” competition initially led to huge content spend (as discussed, benefitting UK production), but it also upended traditional release windows. Many films now premiere directly on streaming or follow a much shorter theatrical run. For example, during the pandemic, some major studio films in the UK were released simultaneously in cinemas and on Premium VOD. This trend has normalized somewhat (the exclusive theatrical window has rebounded to ~45 days for big films), but streaming remains an ever-present alternative for audiences.

From the consumer perspective, streaming offers convenience and a vast library, which has kept some viewers away from cinemas except for must-see spectacle films. Indeed, ongoing cost-of-living pressures and post-Covid habits have solidified streaming as the default for mid-budget dramas and comedies that might once have drawn cinema crowds. UK home entertainment revenue (physical media + digital) grew 14.3% in 2022 to £4.43 billion, with SVoD (subscription VOD) as the main driver (up 17.6%). However, the streaming market is not without turbulence: with inflation squeezing incomes, a Deloitte poll in April 2023 found 47% of UK consumers had adjusted their entertainment subscriptions due to economic conditions, and 19% had cancelled at least one service in favor of cheaper ad-supported options. In response, platforms like Netflix introduced lower-cost, ad-supported tiers (Netflix’s ad tier already accounts for 12% of its UK subscriber base). This suggests streaming growth is maturing; platforms are shifting from pure subscriber acquisition to maximizing revenue per user and controlling costs.

For the UK film industry, the streaming revolution has two key implications:

1. Major streamers as Producers: Netflix, Amazon, Apple, Disney, etc., have become major financiers of film/TV content in the UK. They operate both as studios (setting up projects, hiring British talent, leasing studios) and as distributors (releasing content on their global platforms). Netflix’s long leases at Shepperton and Amazon’s at Pinewood Shepperton (450,000 sq ft for over 10 years) underscore their production commitment. In the forecast period, streaming companies will continue to commission UK-based productions, though likely with more selectivity. The era of “blank cheque” spending has waned – Netflix and others have cancelled some shows and become more ROI-driven after years of deficit financing. Still, the UK’s favorable tax credits and creative workforce make it attractive for streamers’ biggest projects (e.g., Netflix’s The Crown or Amazon’s Lord of the Rings series have leveraged UK stages and crews extensively). One risk factor, as discussed, is if international trade spats (U.S. tariffs) or regulatory changes (EU quotas) alter the calculus for these players – e.g., if UK content loses EU quota status, a streamer like Netflix might invest slightly less in UK productions and more in EU-based ones to meet quotas. This will be an area to watch in 2025-26.
2. Streaming vs. Theatrical Distribution: The competition between streaming and cinemas is complex. In one sense, streaming complements theatrical – for instance, films that underperform in cinemas can find a second life on Netflix; and theatrical hits generate buzz that drives later online viewership. However, for certain genres (romantic comedies, mid-budget dramas), studios have largely bypassed theaters in favor of streaming releases, which means cinemas have lost that slice of programming. The cinema experience is coalescing around big event films (superhero, franchise sequels, high-concept spectacles) and select auteur films that demand to be seen on the big screen. The next 12 months will likely reinforce this bifurcation. We should see studios continuing a hybrid strategy – some films getting exclusive theatrical windows (especially those poised for £100m+ box office), while others debut on streaming or concurrent VOD. Notably, in 2023 some streamers started to reverse course and give their top films limited cinema releases (e.g., Netflix’s Glass Onion got a theatrical run). This trend might grow in 2025 as streamers realize the value of cinemas for event-izing content (and qualifying for awards). For UK audiences, it could mean more chances to see streamer-produced films on the big screen via special engagements, which is a positive sign for exhibition.

Mainstream Studios vs. Independent Sector

The UK film landscape can be seen as two parallel worlds: the big-budget, mainstream studio sector (including Hollywood franchises and streaming originals) and the domestic independent film sector. Their fortunes have diverged in recent years, and policies have tried to balance both.

Mainstream Studio Sector: The mainstream is thriving in terms of production volume and inward investment. As noted, Hollywood’s reliance on UK facilities has grown – inward investment feature films contributed £1.04 billion in UK spend in 2023 (77% of all film production spend). Even after a 40% drop from 2022’s level (due to the strikes), that figure underscores how much Hollywood uses “UK plc” to make its content. Blockbusters like Beetlejuice 2, Ghostbusters: Frozen Empire and others continued to film in Britain in 2023. The big studios (Disney, Warner Bros., Universal, etc.) typically choose the UK for its combination of factors: generous tax rebates, skilled crews, famous infrastructure, and English language convenience. An interesting point: the UK’s strong film unions (BECTU etc.) are still not as restrictive or costly as Hollywood’s, which some U.S. producers quietly acknowledge. The cost of labor and production in the UK remains competitive, especially with the pound sterling at relatively weak levels against the dollar in recent years.

Going forward, the mainstream sector’s outlook hinges on global franchise cycles and streaming budgets. With Hollywood labor disputes resolved by late 2023, production of tentpole films is resuming – e.g., Marvel and Star Wars projects that were delayed are back on track, many filming at Pinewood or Leavesden in 2024-25. The UK is also hosting big streaming series (Netflix’s Bridgerton and The Witcher continue production in the UK, Amazon’s The Rings of Power moved filming from New Zealand to the UK for season 2). These guarantee baseline work for crews. The key uncertainty is whether Trump’s tariff threats will actually redirect any of this studio work. In a worst-case scenario where tariffs loom, Hollywood studios might hedge by shifting some new productions back to U.S. locations or other countries not targeted. More likely, though, is that studios will wait and see – it’s hard to replicate the UK’s advantages elsewhere quickly. In the meantime, the UK government has doubled down on incentivizing big productions.

Policy Support – Tax Relief Changes: In April 2023, the UK announced an overhaul of its film & TV tax relief system. Starting January 2024, the long-running film tax relief (which provided a 25% cash rebate on qualifying UK expenditures) was replaced by the Audio-Visual Expenditure Credit (AVEC). Under AVEC, film and high-end TV productions can claim a 34% tax credit on qualifying expenditure (and 39% for animation/children’s TV projects). This effectively raises the value of the incentive slightly – the net benefit to a producer rose from 25% of spend to ~25.5% after factoring that the credit is taxable. While a 0.5% gain might sound small, the UK’s intent was to remain one of the most attractive production hubs globally, especially as other countries also enrich their incentives. Indeed, competitors like Canada, Australia, and Eastern European nations all offer “chunky tax breaks”. The UK’s consistent support is often cited by U.S. producers as a deciding factor – it’s “boringly, Britishly consistent”, as NFTS director Jon Wardle puts it, giving Hollywood confidence to plan multi-year shoots. The new AVEC has also introduced a separate higher credit for independent British films (with budgets <£5 million) starting April 2025, to boost indigenous productions.

It’s worth noting the government’s motive for the change: aligning with OECD global minimum tax rules and simplifying reliefs. The industry broadly welcomed the increased credit rate. However, rising costs (inflation in crew wages, energy, and a sharp business rates hike on studios in April 2023) have eaten into margins. Knight Frank analysis shows UK studio facilities saw “exponential”rises in rateable values, an added operating cost that outweighs the 0.5% tax credit boost for many, especially smaller productions. So while the mainstream sector remains buoyed by tax incentives, there is recognition that cost competitiveness must be maintained. Any perception that the UK is becoming too expensive could send productions elsewhere. The government’s recently announced plan to grow the creative industries by £50 billion by 2030 suggests ongoing political will to invest in skills, technology, and infrastructure for film.

Independent Film Sector Challenges: The indie sector – comprising smaller UK production companies making British stories, often on modest budgets – faces a very different set of circumstances. These films rarely benefit directly from the influx of U.S. money (except through co-production arrangements or hiring of crew). Instead, they rely on domestic funding (BFI grants, UK broadcasters, private investors) and presales to distributors. Brexit’s elimination of EU MEDIA grants and Eurimages co-production funding (the UK isn’t a member of Eurimages) has tightened financing options. The BFI overhauled its National Lottery funding strategy in 2023 to better support independent filmmakers over the next decade, emphasizing diversity and regional talent. Yet the pot of funding is finite, and far smaller than what EU membership provided.

One bright spot is that 2023’s co-production spike indicates some indie producers are finding new partners abroad – possibly leveraging treaties with countries like Canada or Australia, or tapping into streamer acquisitions. Also, the success of a few low-budget UK films (e.g. the uplifting drama The Unlikely Pilgrimage of Harold Fry and the Sundance-winning Scrapper in 2023) shows that quality work can still break through. The government’s introduction of an “Independent Film Credit” (the higher AVEC rate for qualifying small films) in 2024-25 could slightly improve economics for indies. Even so, the fundamental challenges remain: financing and visibility. With marketing budgets scant, many UK indie films struggle to compete for attention in cinemas dominated by Hollywood marketing muscle. Streaming can be a savior here – a Netflix or MUBI acquisition can bring a niche British film to millions of viewers. The concern is that streamers have also cut back on buying indie films in favor of producing their own content or focusing on proven IP.

Over the next year, we expect to see the independent sector adjust strategies. This could involve more “internationalizing” of projects (to tap global audiences or funds) and exploring innovative distribution (such as event-based releases, or collaborating with platforms for curated British film collections). Industry bodies like Directors UK and Producer associations continue to advocate for policies to aid indies – for example, calling for the UK to re-engage with EU cultural programs, and for streamers to invest in local content (as is mandated in some countries). There is also an emphasis on retaining talent: the UK wants to avoid a brain drain where emerging filmmakers move to the U.S. or elsewhere due to lack of local opportunities. Maintaining a healthy indie ecosystem is seen as culturally and economically important – after all, today’s small British film could be tomorrow’s BAFTA or Palme d’Or winner, and the seedbed for the next generation of creative hits.

Outlook Through Summer 2026

Barring unforeseen shocks, the UK film industry is poised for a period of stabilization and cautious growth in the coming 12 months (mid-2025 through mid-2026). Here are the key forecasts and factors to watch:

• Production Volume: We anticipate UK production spending in 2025 to hold steady or grow modestlyfrom 2024 levels, assuming Hollywood’s production pipeline normalizes post-strikes. Big franchise films and streaming series that were delayed are now greenlit, which should keep studios busy. Pinewood’s management expects global production activity to ramp up again (though not to 2022’s frenzy). A potential surge could come if studios decide to “catch up” on content lost during the strike months – a mini boom of late 2024 and early 2025 shoots is possible. However, growth will likely be single-digit percentage-wise, as streamers remain fiscally prudent. One major downside risk is the U.S. trade policy: if Trump’s tariffs show signs of becoming reality in 2025, we could see a freeze or reduction in U.S. projects in the UK by 2026. The industry, in that case, would pivot to fill stages with more domestic and European work, but those can’t easily replace a Marvel or Netflix mega-production. Most analysts consider a full film tariff unlikely (given opposition within Hollywood and legal challenges), but the uncertainty itself may slightly dampen investment until resolved. On balance, our base case is production spend in 2025 roughly on par with 2024 (around £5.5–6 billion), with an upside scenario of exceeding the 2022 record if multiple tentpoles stack up – and a downside scenario of a dip if trade war fears intensify.
• Studio Space and Investment: The spree of new studio announcements will likely slow, focusing on completing projects already underway (like the Crown Works Studios in Sunderland slated to open with 20 stages). Real estate investors will be looking for signs of sustained demand – e.g., if Netflix/Amazon extend leases or if new entrants (like HBO/Warner) seek permanent UK hubs. If the next year proceeds without incident, by summer 2026 the UK could even face a slight capacity crunch again, as high-end TV production (think House of the Dragon Season 2, etc.) runs concurrently with films. This could revive interest in stalled developments. Conversely, any slump in bookings would confirm that the market got ahead of itself, and some planned studios might be shelved or repurposed. For now, the fundamentals – a global content boom and UK’s strengths – remain intact, so we foresee healthy occupancy and selective investment (with perhaps more focus on regions outside the overheated Southeast).
• International Co-Productions: Expect co-productions to remain a growth area. The record co-pro spend in 2023 suggests producers are leveraging the UK’s co-production treaties to keep projects flowing despite funding challenges. We anticipate more UK-Europe collaborations (e.g., with Ireland, France, Italy, etc.) especially if EU funding programs become accessible via association agreements. The UK government’s openness to Creative Europe MEDIA association (as recommended by Parliament in April 2025) will be a key development to monitor. If by 2026 the UK negotiates entry into that program, it could unlock new grants for co-produced films and training. Similarly, maintaining UK content’s EU quota status is crucial. Should the EU decide in 2025 to exclude UK works, we might see an adjustment period where UK producers seek more EU co-producers on board (to still qualify as “European”) or increase shooting in EU locations to hedge bets. Our forecast assumes no immediate drastic change – the quota issue will likely still be under discussion through 2025, meaning business as usual in the short term. Co-productions with the U.S. could also rise as a way to circumvent any potential tariffs – e.g., a film structured as a UK-U.S. co-production might argue it’s partly American-made. Studios could explore such legal workarounds if needed.
• Box Office and Exhibition: The cinema sector should see a strong 2025. We concur with forecasts of £1 billion+ gross in 2025, assuming no new pandemic or comparable disruption. By summer 2026, UK admissions might reach ~140–150 million annually, nearing the “new normal” post-Covid level (which could still be a bit under the 176m of 2019). Full recovery in audience numbers may align with 2026’s big releases (e.g., if Avatar 3 in late 2025 and other tentpoles perform exceptionally, it will help). Cinema chains will continue to emphasize premium experiences (IMAX, 4DX, luxury seating) to entice viewers – those formats have been revenue drivers even with lower attendance. We also anticipate further consolidation or partnership in the exhibition space: for instance, independent cinemas banding together for joint programming, or streaming services renting cinema screens for special showings (as a promotional tool). The existential threat streaming posed at the height of lockdown has eased into a more nuanced coexistence, and by 2026 we expect cinemas to have firmly carved out their role as venues for communal, high-impact film experiences. The challenge will be sustaining attendance on smaller films – this may depend on distributors investing in more marketing for indie titles and perhaps on event-based strategies (director Q&As, film festivals, etc.).
• Streaming Strategies: In the streaming realm, subscriber growth in the UK will plateau, shifting focus to content quality and retention. For UK content creators, this means streamers might be more selective but will still commission local productions that differentiate their service (e.g., Netflix investing in a Sherlock Holmes spin-off series made in the UK to appeal globally). The “streaming wars” are also leading to some platforms bundling or folding – by 2026 we might see fewer, more aggregated services. A current example is Warner Bros. Discovery’s plans which could involve content sharing deals rather than launching a standalone HBO service in every market. UK producers might actually benefit if U.S. studios license more content to third-party platforms internationally (providing another market for UK shows). On the flip side, the cost-cutting at streamers could mean fewer risky commissions – tried-and-true genres (crime dramas, book adaptations) may get the greenlight over edgy arthouse projects. This could somewhat sideline highly creative independent work unless subsidized by public funds.
• Government and Policy: The UK government is expected to continue championing the screen sector. With an election due by 2025, both major parties recognize the film/TV industry’s value (economic and “soft power”). We may see new incentives for studio infrastructure investment or training programs to expand the workforce. Also, trade policy will be an area to watch: the UK might seek bilateral understandings with the U.S. to exempt audiovisual services from any tariff escalation. The recent CMS Committee report (April 2025) pushing for visa-free creative travel and Creative Europe re-entry indicates a political will to reduce post-Brexit frictions. If these recommendations translate into policy by 2026, it could significantly ease collaboration with Europe (e.g., touring film promotion, festival participation, etc.).

In conclusion, the UK film industry stands at an inflection point where global opportunity and risk intersect. The next year will likely solidify the UK’s role as a production powerhouse – buoyed by sustained inward investment and a recovering global box office – while also testing its adaptability to geopolitical shifts. If trade disputes can be navigated and creative alliances maintained (or rebuilt) with Europe and beyond, the UK is well positioned to thrive. The underlying fundamentals are strong: world-class studios and talent, supportive public policy, and a proven ability to deliver the stories the world wants to watch. As one industry executive reflected on the tumultuous recent period, the UK film sector has weathered multiple “storms” and “can’t handle any more” shocks – but it has also proven its resilience. Stakeholders are collectively working to ensure that the “goose that laid the golden egg” (international production) doesn’t fly away, and that home-grown cinema continues to punch above its weight on the world stage. The forecast through summer 2026 is therefore guardedly optimistic: growth with caution, innovation under pressure, and an industry fervently advocating to keep the UK creative, collaborative and open for business.