British film industry earns a record £1bn, with help from Harry, Bridget and Alfie

Two years ago the leaders of the British film industry were in despair as production spending plummeted after threatened strikes in the US and at home, the outbreak of foot-and-mouth disease and the terrorist attacks of 11 September.

Two years ago the leaders of the British film industry were in despair as production spending plummeted after threatened strikes in the US and at home, the outbreak of foot-and-mouth disease and the terrorist attacks of 11 September.

But today they are celebrating a remarkable turnaround after official figures showed film spending in the UK last year was twice that of 2002 and exceeded £1bn for the first time. Films such as Harry Potter and the Prisoner of Azkaban, Bridget Jones: The Edge of Reason and the remake of the Michael Caine classic, Alfie, helped make 2003 a record year with £1.17bn spent on nearly 180 movies.

Although the Film Council, which collates the figures, had been predicting a resurgence for several months, the final tally exceeded expectations and far surpassed the previous record of more than £750m spent in the boom year of 2000. The figure is a 113 per cent increase on 2002 when there was £550.45m of investment.

Part of the success stems from a massive growth in the number of co-productions with other countries, accounting for 102 of the 177 films made.

Britain is increasingly offering its expertise in technical skills while conceding that other countries may provide better weather or more appropriate scenery. The director Oliver Stone, for example, is shooting his epic on Alexander the Great, starring Colin Farrell and Angelina Jolie, in Britain and in Morocco. Anthony Minghella shot most of his American civil war epic Cold Mountain, starring Jude Law and Nicole Kidman, in Romania but the film was edited in the UK.

The French are co-operating on a film remake of The Magic Roundabout and Matthew Macfadyen, who stars in Spooks, is getting his first film lead in a co-production with New Zealand, called In My Father's Den.

Steve Norris, the British film commissioner, said: "In 2003, the UK was involved in film productions ranging from big-budget international, European co-productions, to mid and lower-budget feature films. The high numbers of co-productions highlight the truly global nature of the film industry and the key, and increasing, role that the UK plays within it."

There has also been an increase in what most film-goers regard as truly British films and the industry calls "domestic features", upto 45 from 37, an increase of 21 per cent.

Judi Dench and Maggie Smith filmed Ladies in Lavender at Pinewood Studios last year with lottery funding through the Film Council, while Johnny Vegas and Mackenzie Crook, from the television programme The Office, made Sex Lives of the Potato Men. Gurinder Chadha is following up her hit movie, Bend It Like Beckham, with Bride and Prejudice, a Bollywood version of Pride and Prejudice.

Mr Norris said the increase in domestic features that reflect the people and culture of the UK showed the major cultural and economic contribution that the UK film industry provides. "The UK continues to be recognised by international film-makers as one of the best places in the world to make a film," he said.

"If we are to make the most of this success, we need to ensure that we continue to offer the skills and infrastructure necessary to attract overseas film makers to use them. And we need to improve distribution to ensure that more British films are able to be seen by audiences at home and abroad."

International competition for lucrative film contracts is tough with new studios opening across Eastern Europe and planned in countries such as South Africa, where the costs are much lower. That is why the UK industry has constantly emphasised its tradition as a leader in the technical side of film making.

Last year the industry announced plans to boost technical training to create a new generation of editors and camera crews. An end to apprenticeships in studios about 20 years ago has resulted in an ageing workforce.