Physics funding in the UK is facing very challenging times ahead as the STFC evaluates its funding priorities. This Physics Today summary of the funding woes highlights all of the current and previous issues regarding the funding shortage.
It has been a number of years now it seems that physics funding in the UK has been in the dumps. I can't believe that this isn't doing considerable harm not only to ongoing projects, but also in attracting more people into the profession. The US physics funding is slowly recovering after the influx of funding this past year, but it will take a sustained effort to really get it going after such a long period of barely surviving. So the effect of reduced funding isn't that easy to recover from.