The outlawing of GAAP [generally accepted accounting principles] tax funds means the british film industry is currently unsure of what to do, or indeed what sort of future it may have. On it's knees? Not quite but, very nervous - the jury is still out on the real effect of the change.
The old law allowed, by way of a loss offsetting scheme, an incentive for investors to bank roll films (that had the potential to lose money) with large amounts of cash (the funding nationally ran into hundreds of millions of £s).
That's been stopped now. The government says they weren't targeting films, but either way british producers and studios now have no idea if they'll be able to get any of their projects made.
MrStrange
It doesn't surprise me - the British government has failed to help the film industry for a hundred years.
Also check out:
http://filmjournal.net/danielstephens/2007/04/03/the-failures-of-the-british-film-industry-since-1945/