British film The Constant Gardener looks set to dominate the Baftas on Sunday.
The Constant Gardener was partially funded by the UK Film Council
The John Le Carre thriller leads the field with 10 nominations but faces competition from British rivals including Pride and Prejudice and Mrs Henderson Presents.
With the success of UK film-making reinforced by a string of Oscar nominations, the industry would appear to be in good health.
We asked two insiders for their view on the current state of the British film industry.
MICHAEL KUHN, Film producer
Former Polygram chief Kuhn, 56, has produced hits including Four Weddings and a Funeral, Notting Hill and Trainspotting. He set up Qwerty Films in 1999 and was appointed Chair of the National Film and Television School in 2002.
Producer Michael Kuhn set up Polygram in 1991
The film industry has gone through cycles. When I first started 20 years ago, we were making kitchen sink-style movies - very gloomy stuff - and no-one was interested in them.
Then we set up Polygram, and we were making things that were commercially very successful. From Four Weddings onwards, if it wasn't commercial, it wasn't worth doing.
Now it has gone too far that way. People like the late Derek Jarman, who always had a place in British film culture, would find it very difficult to get his films made.
Ken Loach has had a really tough time with his sort of film-making too, and I think that's bad. They are part of what we do here and they should be supported.
The good news is that both the government and the Film Council have started taking on board the need for change - which is why I'm not as gloomy as I was six months ago.
But I've never been gloomy on the creative side, because I think our creative talents are considerable.
Admittedly, it is harder for us to create an independent industry here in Britain because we share a common language with America, but I don't think it is true that we just mimic Hollywood films.
There is always something British about our films, even if they are commercial. Polygram hits like Four Weddings or Trainspotting were clearly a case of us doing our own thing.
Our problem is that we have a hit, but it doesn't produce an industry. There is a perpetual fight to create a sustainable industry here.
Unlike their European counterparts, broadcasters in Britain have never really seen it as part of their duty to support film and that is one area where I would like to see change.
It is not a matter of their duty, it is a matter of the opportunity they are missing. Channel 4 came in and set up Film Four with £10m back in the early 80s - and that transformed the British Film Industry. A little money made a tremendous difference.
JOHN WOODWARD, chief executive officer UK Film Council
John Woodward was appointed chief executive officer of the UK Film Council in 1999. Prior to that he was director of the British Film Institute (BFI), and also successfully lobbied for the introduction of tax breaks for film production investment.
John Woodward has been with the Film Council for seven years
Britain loves the movies and the world loves the British film industry.
It's true the film production sector has gone through a very bumpy patch over the last 18 months, but we are now poised to reap the rewards - with nothing to fear except the British disease of talking ourselves down!
The facts speak for themselves:
Even in a turbulent time like 2005, Britain stood up as the most important film industry on the planet after the US, generating over £550m of production spend and involvement in 123 feature films.
Meanwhile 2005 saw a world-wide downturn in movie- going, almost everywhere except the UK.
More importantly 35% of the UK box office takings went to British films, from Harry Potter to Nanny McPhee, from Pride and Prejudice to Wallace and Gromit, which are now being exported around the world as a flagship for British stories, culture and talent.
Looking ahead to 2006, the Government's generous new tax credit will subsidise up to 20% of the cost of lower budget films like Bend It Like Beckham and 28 Days Later, and up to 16% of big budget films like Harry Potter and Charlie and the Chocolate Factory.
For the first time in years, the key British broadcasters are also drawing up plans to support British film with more money and more marketing.
In addition, state-of-the-art digital film projectors are being installed in cinemas around the country to give British audiences a bigger choice of films.
Looking further ahead, the downloading revolution is about to strike the film industry and provide the biggest single business opportunity for a generation.
The British film industry can now look forward to the future with real confidence.
The Orange British Academy Film Awards are broadcast on BBC One at 2100 GMT on Sunday.