How a sorcerer, a cyberbabe and a man named Bond fattened the land

By Jo Dillon, political correspondent

An 11-year-old wizard and a gun-slinging cyber-babe attracted half a billion pounds to the UK last year.

High-profile film productions including Harry Potter and Tomb Raider were responsible for £539m of overseas investment, according to a government report to be published next week. The record figure is 33 per cent up on 1999 and 822 per cent more than 1992 levels.

The success of the film industry has boosted the inward investment figures – now at £3.4bn. Government sources said the money coming in had created or safeguarded 60,000 jobs during 2000-01.

Many of the industries benefiting from record inward investment had been assisted in attracting cash by Government grants. Latest figures show that the UK is the number one location in Europe for inward investment projects. A Department of Trade and Industry source said: "This report shows that companies recognise that the UK is a good place to do business and that government support for industry is paying off in jobs."

Ministers are delighted that the UK film industry is contributing so much more to the economy. Following tax breaks introduced by Chancellor Gordon Brown aimed at making Britain a more attractive destination for filming on location, record numbers of movies have been shot in the UK. On movies with budgets up to £15m, film makers are now able to write off production costs against tax in the first year.

Harry Potter and the Sorcerer's Stone – the keenly awaited celluloid version of the first of JK Rowling's hugely successful books – is not due out until November. But as well as the money from the film-makers themselves, the regions used for filming have also assisted local businesses and will undoubtedly attract tourists to the area: Durham and Gloucester cathedrals, Lacock Abbey in Wiltshire, and Christ Church College and the Bodleian Library, in Oxford, were all used as locations.

The Harry Potter phenomenon, which shows no signs of letting up, is expected to bring yet more income to Britain when the second in the sequence, The Chamber of Secrets, is filmed. The film is still at casting stage but, depending on the success of the first movie, is due to be released next year.

Tomb Raider, featuring Angelina Jolie as Lara Croft, the humanised computer game character, was also filmed in the UK. And other productions, including the James Bond film The World Is Not Enough – the opening sequence of which was filmed on the Thames and at the Millennium Dome – Proof of Life, Chocolat – though set in 1950s France, it was largely filmed in rural England – Possession and Pearl Harbor, also contributed to the investment figure.

The Film Council is now developing a multi-million pound strategy to help increase the number of films and television series – and boost revenues – still further. Plans include working with local tourist boards to capitalise on the kudos regions get after they are featured in hit films.