But the 1997 version is unusual for its setting: a semi-fantasy world loosely based on 1930s-1950s England (the high street scenes were Theale, Berkshire) with archaic brands and beautifully retro redbrick, cream and green styling - yet with some American actors and American fixtures, such as a US-style city hall (actually Ealing Town Hall); a policeman in archaic gendarme uniform directing traffic from a French-style podium; anachronisms such as mobile phones; and bizarre conceits such as every car - even the villain's stretch limousine - being some form of Morris Minor.
I particularly liked the Borrowers' costumes: previous adaptations (and the original book illustrations) had them just copying everyday human clothes, but this film had them in Mad Max style protective clothing plausibly improvised using the kinds of materials they would find. In this video, The Borrowers in the making (part 1 / part 2), costumer Marie France describes how the clothing was made to show scale: for example, Homily's apron is made of a washing-instruction label, Spiller is dressed in M&M packaging, and Pod is wearing overalls made from a driving glove.
Laurie N Ede comments in the 2010 British Film Design: A History:
... The Borrowers was something different. Its production style strongly recalled Gaumont-British's internationalist films of the 1930s; it had an imported American star (John Goodman) and it attempted to mimic the style of the Hollywood family comedy (some reviewers noted the similarity of The Borrowers to the contemporary American comedy Mousehunt). As with the old Gaumont pictures, The Borrowers fell short of its aims, but it did have some terrific sets.
A glance at NewsBank finds that The Borrowers, as a non-Disney children's film, required strong marketing in the USA, hence many departures from the original giving a stronger skeleton, and more conflict, to the plot.
However, it differs significantly from the recent BBC series, notably in the addition of a baddie, John Goodman, the American star of Roseanne and The Flintstones , whose semi-sadistic frustration and humiliation (electrocution, burning and near-death by 400 gallons of cream cheese are involved) form the core of the plotline.
The producer is Tim Bevan of Working Title, the company behind both the film and television versions of Norton's stories. "We needed something simple in order for it to work on the big screen, and the idea was to create a chase that would carry us through the film," he explains. "We needed a typical movie-type villain. People want to be surprised, but not that surprised - you have to convince parents that it's going to be OK. It's very difficult to compete with Disney, especially in America. They've got a cartel on family films."
- Small but perfectly marketed (Sheila Johnston, The Times, Dec 3rd 1997.
International marketing may well explain many of the US elements, but not the overall surreal design combination - I found the whole effect visually and imaginatively stunning.
Addendum: I just found a nice appreciation of the book series, and some background on Mary Norton's inspirations for it, in chapter 7 - Living Dolls II - of Noel Perrin's 2003 Child's Delight, a collection of essays on underappreciated children's literature.