News
Leasing industry reports first upturn for 18 months
Figures published today show the first sign of an upturn in investment by British businesses using asset finance. The Finance & Leasing Association’s (FLA) latest figures show that asset finance (leasing and hire purchase) provided to UK businesses for investment in new equipment increased by 11%1 in March this year compared with the previous year, the first month of year-on-year growth since September 2008.
£1.7 billion of asset finance was provided for new equipment in March this year, compared to £1.5 billion in March 2009. It will fund new manufacturing plant, computers, company vans and other types of business equipment.
While these figures are cause for cautious optimism, new asset finance business remains significantly lower than pre-recession levels. The lack of investment during the recession has led to ‘Rusting Britain’, as businesses make do with old and energy-inefficient equipment, and are unprepared to meet market demand as the economy recovers. Research2 has found that the fall in business investment in the most recent recession was greater and more rapid than in the recessions of 1980 and 1990.
Commenting on the statistics Julian Rose, Head of Asset Finance at the FLA, said:
“These figures suggest that Britain’s businesses are beginning to increase their investment in new equipment. Many use leasing because it helps them to manage their cashflow and to obtain the business equipment they need, when they need it, and at reasonable cost. But the new Government needs to help by giving small businesses that lease equipment the same tax incentives as those that can afford to buy outright3.”
Table 1: Total asset finance business, and extracts of breakdown by asset class
| Mar 10 | % change | Q1 10 | % change | 12 months to Mar 10 | % change | |
| Business equipment finance (£m) | 170 | +31 | 350 | -11 | 1,319 | -29 |
| Car finance (£m) | 646 | +31 | 1,329 | +12 | 5,318 | -13 |
| IT equipment finance (£m) | 94 | -12 | 213 | -17 | 1,204 | -20 |
| Plant and machinery finance (£m) | 257 | -11 | 633 | -16 | 2,601 | -40 |
| Commercial vehicle finance (£m) | 360 | -1 | 778 | -15 | 3,203 | -28 |
| Aircraft, ships and rolling stock finance (£m) | 40 | -84 | 166 | -63 | 1,135 | -26 |
| Total excl. high value (£m) | 1,705 | +11 | 3,721 | -4 | 15,514 | -24 |
| Total FLA asset finance (£m) | 1,794 | -20 | 4,121 | -25 | 17,912 | -33 |
- ends -
Note to editors:
1. This figure excludes high-value deals (deals over £20m, which made up 5% of total asset finance business in March)
2. The FLA commissioned research from the Open University which showed that around one on five small businesses is suffering because it cannot access funds for investment.
3. Leasing is currently excluded from finance guarantee schemes and the corporate tax regime gives tax incentives to profitable businesses that buy equipment outright, rather than assisting businesses which lease their business equipment.
4. In 2009 FLA members provided £72.5 billion of new finance to UK businesses and households. Almost £19.3 billion of finance was provided to businesses and the public sector, representing around a quarter of all fixed capital investment in the UK last year. £53.2 billion was in the form of consumer credit, including a third of all unsecured lending in the UK. And £16.5 billion supported the purchase of half of new car registrations in the UK.
For further media information, please contact:
Russell Hamblin-Boone, FLA
T: 020 7420 9656 E: russell.hamblin-boone@fla.org.uk M: 07810 374110
Helen Saxon, FLA
T: 020 7420 9664 E: helen.saxon@fla.org.uk M: 07918 766993