Tory Chancellor George Osborne has revealed that the Coalition Government will not be implementing a tax break for video games.
In devastating news for UK studios, Osborne labelled the proposal put in place by the former Labour Government earlier this year "poorly targeted" as he delivered today's Budget.
Former Chancellor Alistair Darling announced in March that the Government would offer tax breaks to the UK video games industry similar to those enjoyed by the domestic movie sector.
However, UK video games industry leaders were quietly fearful that the recently-elected Coalition Government would withdraw the offer in today's announcement - and those fears have now become reality.
George Osborne had been particularly vocal about tough cuts in the lead up to the Budget - and video games tax relief was clearly in the firing line.
Development industry trade body TIGA has spoken of its fear of the 'brain drain' facing the UK industry should it not get tax relief -as studios and key staff members emigrate abroad.
According to TIGA figures, the UK's games development workforce has fallen by a shocking 44 studios - six per cent - since 2008.
These have included Derbyshire's Free Radical (creators of Timesplitters) and Bath's Pivotal (Conflict: Denied Ops).
Major UK development houses include Rebellion (AVP), Lionhead (Fable), Codemasters (DiRT), Rocksteady (Arkham Asylum), Rockstar (GTA) and many more.