A method of motion-compensated video encoding that enables a video sequence with a global motion component to be encoded in an efficient manner. A video encoder (600) is arranged to assign macroblocks to be coded to specific coding modes including a skip mode, which is used to indicate one of two possible types of macroblock motion: (a) zero motion, or (b) global or regional motion. As each macroblock is encoded, a previously encoded region surrounding the macroblock is examined and the characteristics of motion in that region determined. With the skip mode, the macroblock to be coded and a motion vector describing the global motion or regional motion is associated with the macroblock if the motion in the region is characteristic of global motion or regional motion. If the region exhibits an insignificant level of motion, a zero valued motion vector is associated with the macroblock.