One of the characters in the film mentions that just before everything - government, news agencies, relief services, army support, etc. - collapses, there were reports of the infection in Paris and New York. So, perhaps as you say, only the home islands are infected, and the news report was just one more act of sheer paranoia on the part of the media. Anyway, even if it is only the home islands, that is still a distinctly unpleasant thought. One question I have about the virus, is what happens when if the infected dead contaminate the lakes/rivers of England with their putrescence? Further, when the people come back, and the army/government burn the bodies of the infected, could a new series of contagions take place?
Also, hard to say where I myself would choose to hide out. On one hand, if you're in the middle of the countryside by yourself (or w/family, loved ones, etc.) you might go unnoticed, but it would be awfully easy for those bloody infected people to sneak up on you and do away with you. On the other hand, staying in the cities only works so long as you have water. The two main characters in the film meet up w/a father and daughter who tried to stay holed up in their flat, but were running out of water and it was 'the hottest summer on record' for London, etc., so there was no rain at all.