UK trade body TIGA says that without government-supported tax breaks for game developers that the organization is proposing, the industry will decline 5 percent annually for the next five years.
On the other hand, said the group in a statement, government-instituted tax breaks would "eventually" result in 4 percent annual growth for the games industry in the UK.
"Because most of our key competitors benefit from a tax break for games production, our industry is at a competitive disadvantage," said TIGA vice-chairman and Ubisoft Reflections managing director Gareth Edmondson.
"Unless the UK Government introduces TIGA's proposed Games Tax Relief, our research suggests that employment in the development sector will fall by 5 percent in each of the next five years, from 9,025 in 2009 to 7,351 in 2014," added Edmondson. "There would also be a fall of 1.9 million in development expenditure over the same period."
"In contrast, with Games Tax Relief enacted, the industry would stop shrinking in 2010, grow by 2 percent in 2011 and by 4 percent in each of the next three years."
Edmonson also said the tax breaks would create or protect some 3,550 graduate level jobs and £457 million ($750 million), and would pay back its own cost in tax receipts over five years.
"The UK Government has a clear choice: invest in an inherently successful industry to perpetuate our leading position in the world, or preside over the decline of a key knowledge industry," he concluded.