In August this year, Variety, the American trade entertainment magazine, ran two features with dramatic headlines. The first appeared alarmist: ‘LA mayor declares state of emergency as movie and TV production flees Hollywood’. Until, that is, the second popped up. Illustrated with an image of Darth Vader set against a Union Jack background were the words that would please any geek this side of the Atlantic: ‘Star Wars deal marks latest coup for the UK’.

Over the past decade, while no one outside the film industry has been paying attention, the UK has become the second home of the US movie business. Hollywood may have the sign in the hills and the fantastic light, but we have the incentives – in the shape of a tax credit of 25 per cent of qualifying production expenses for films that spend up to £20m – and the high-quality crews.

We also have the facilities and infrastructure to keep pace with international competition. Leavesden, the studio owned by Warner Bros, is so huge that when the Harry Potter films were shot there, the crew got around by bicycle. Pinewood boasts the 18,000 sq m 007 stage and the world’s only permanently filled underwater stage.

In a recent Variety interview, Pinewood executive vice-president Andy Weltman said: ‘When you factor in that you don’t have to bring in the crews because ours are among the best in the world, and you’ve got an incentive that fully covers above-the-line, it makes the UK one of the cheapest places in the world to shoot.’

Pinewood, of course, has an incredible history, with films as diverse as Oliver Twist, Chitty Chitty Bang Bang and Skyfall produced on its stages, and it continues to attract some of the world’s most exciting filmmakers. Gravity, the new Alfonso Cuarón film starring Sandra Bullock and George Clooney as astronauts cut adrift in space, was shot at Pinewood and its sister studio Shepperton. Dozens of films that appear to have ‘made in America’ stamped all over them have been made here, at least in part: Fast & Furious 6, World War Z and Thor: The Dark World were all shot at Shepperton, while A Good Day to Die Hard used Pinewood.

Adrian Wootton is the chief executive of Film London, the agency charged with developing the film industry in the capital, and the British Film Commission, the unit responsible for promoting the UK as the best place to produce feature films. He recently went to the London premiere of Rush, a film about F1 drivers James Hunt and Niki Lauda directed by the all-American Ron Howard and starring Australian hunk Chris Hemsworth.

‘I had to pinch myself,’ says Wootton. ‘I’m watching this great film and I’m thinking, “Yep. It was shot on set at the airfield in Blackbushe in Hampshire, in the rain.” Even better, Rush was written by a Brit, Peter Morgan; produced by a Brit, Andrew Eaton; and shot by a Brit, Anthony Dod Mantle. Even the special effects were done by a London-based company. Ron Howard can’t get enough of us: he shot TheDa Vinci Code here and is starting work on In the Heart of the Sea here, with Hemsworth, Cillian Murphy and Ben Whishaw.’

Emphasising how much things have changed in the past 10 years, Wootton recalls: ‘When we first started Film London in 2003, I had a big report sitting on my desk that said London was too expensive, too bureaucratic, too slow, too unwelcoming. Americans hated filming here. We’ve worked so hard to change things: now an increasing number of films are shot in Royal Parks, Historic Royal Palaces, the Houses of Parliament. Vitally, our post-production and visual- effects industry has grown exponentially, investing in training and incredible amounts of technology.’

Which is why a visual-effects (VFX) company such as Framestore is at the very heart of the UK film industry’s growth and increasingly global dominance. Sir William Sargent co-founded the company in 1986 after studying business and law at Trinity College, Dublin, and has Gravity, filmed at Pinewood and Shepperton, with VFX by Framestore; a model-maker works on a Star Wars creature at Pinewood; Framestore won an Oscar for its work on The Golden Compass; Framestore’s seasons scene from Notting Hill

overseen its rise from an award-winning commercials house to a world-renowned VFX maker. Past victories include an Oscar for The Golden Compass as well as work on Quantum of Solace, all the Harry Potter films (for which it brought the house elf Dobby to life), War Horse, Batman, Iron Man and Notting Hill. Sargent explains that it excels at animation character and photo-real work, ‘creating something that is artificial but so realistic that you wouldn’t know.’

It was Framestore that came up with the idea of Hugh Grant passing through four seasons as he walks along Portobello Road in Notting Hill and seamlessly blended five beaches into one for Danny Boyle’s

The Beach. Best of all, it confounded its competitors with its work on Cuarón’s Children of Men. ‘We all work within 500 yards of one another in Soho,’ says Sargent. ‘We go to the same pubs. People knew we’d done Children of Men. They asked what we’d done. We said, the baby. They asked what we’d done to the baby. We told them we’d created the baby. None of our peers had realised the baby was entirely digital.’

Framestore’s work on Gravity might well bring it another Oscar – or a nomination at the very least. As Sargent points out, the whole film is computer-generated. ‘You should look at it and assume we flew 200 people up to a space station, set up a zero-gravity crew and filmed it on location.’ In reality, Cuarón had Bullock in a harness inside a box on a Pinewood soundstage. The point is, watching Gravity, you should utterly believe it was shot in space, ridiculous though that idea may be.

And it’s not just the blockbuster films that are taking advantage of the wealth of British talent. Mike Slee, director of a gorgeous 45-minute nature documentary set in North America called Flight of the Butterflies, chose to do all the computer-generated work in the UK. ‘We had really complicated VFX jobs, such as creating the most realistic CGI butterfly ever seen. Our funding came from the National Science Foundation in the US, which is incredibly strict about accuracy. We employed a British VFX company called Dimenxion that has previously worked on projects such as Attenborough’s Flying Monsters, so was used to super-high-end natural-history projects. They more than met the brief.’

Despite the recession, the British film industry is flourishing. Pinewood is hoping to expand to deal with continued demand. Framestore is not only booked up until next summer, but has also worked on some of the most exciting upcoming releases, from the Coen brothers’ Inside Llewyn Davis to Richard Ayoade’s The Double and Ben Stiller’s The Secret Life of Walter Mitty. Skyfall, which Wootton calls ‘the best promotional marketing tool I could have for my job’, has become the UK’s biggest-grossing film, earning £103m at the box office and a further £651m worldwide. It says something that its astute producers, Barbara Broccoli and Michael G Wilson, have chosen to use the UK as a base rather than take Bond to Hollywood.

Perhaps, then, it should come as no surprise that Star Wars is about to be filmed here. And, as Wootton says, ‘the fact that Lucasfilm think this is the best place to make the movie is such a massive vote of confidence. We’re in a very healthy place. Stephen Frears, whose own new film Philomena was shot in the UK and Ireland, says the UK is almost too popular now. Which isn’t to say we don’t have our own great directors constantly making new movies, from Mike Leigh to Michael Winterbottom. I can see no sign of the demand going away, but we need to keep feeding this industry.’

Equally importantly, the British people are supporting the film industry more than ever. Cinema admissions in 2012 reached 172.5 million, the third-highest level for 40 years. The same year, UK box-office receipts were the highest on record: an incredible £1.1bn. In other words, despite the rise of streaming, and of Lovefilm and Netflix, we still love going to the cinema, to see films that look like they were made in Hollywood and not Pinewood.

Wootton thinks this is the best news of all. ‘Even if you have half a wall in your house devoted to the latest digital video projector, the chances are you will still love going to the movies. Of course, the consumer model is changing – people are watching huge numbers of films on their iPads, their laptops, and their phones. But going to the cinema is a communal experience. At its best, film is an emotional, visceral experience, whether it’s a touching, romantic film or an action spectacle.’

In the end, it seems we are still herd animals, still keen to share experiences, even if it is in the darkness of a cinema. ‘Absolutely,’ says Wootton. ‘We like laughing and crying together. We like being together. I don’t think we’ve ever got bored with that situation. We can watch as many movies as we like at home alone, but it’ll never be the same as watching them in a cinema.’