Asset finance market fell by 2% in December, but grew by 14% in 2021

14 February 2022

New figures released today by the Finance & Leasing Association (FLA) show that total asset finance new business (primarily leasing and hire purchase) fell in December 2021 by 2% compared with the same month in 2020. In 2021 as a whole, new business grew by 14% compared with 2020 to £31.3 billion, but remained 12% lower than in 2019.

The plant and machinery finance and business equipment finance sectors each reported new business up in December by 24%, compared with the same month in 2020. By contrast, the IT equipment finance sector reported a further fall in new business of 51% over the same period.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said:

“The asset finance market rebounded strongly in 2021 with growth reported across many sectors. The plant and machinery finance sector returned to pre-pandemic levels of new business as new finance for construction equipment and agricultural equipment grew by 39% and 18% respectively.  Asset finance new business provided to SMEs was also within touching distance of its 2019 level, reaching £19.9 billion in 2021.  

“The pace of recovery in some asset finance sectors has been disrupted by heightened Covid-related uncertainty as new waves and variants emerged, and by global shortages of materials, goods and labour.  While economic and market conditions will remain challenging this year, supply issues are expected to ease, and business investment is expected to recover as the year progresses. The FLA’s Q1 2022 industry outlook survey shows that 90% of asset finance providers expect new business growth over the next twelve months.

“FLA’s latest figures show the importance of asset finance to SMEs who account for more than 99% of all UK businesses. We therefore continue to urge the Government to extend the super-deduction allowance for expenditure on qualifying plant and machinery to include leasing so the industry can support more businesses to recover and grow.”

 

Dec

 2021

% change on prev. year

3 months to

Dec 2021

% change on prev. year

12 months to

Dec 2021

% change on prev. year

Total FLA asset finance (£m)

2,725

-2

7,696

-1

31,296

14

Total excluding high value (£m)

2,511

-2

7,175

-2

29,259

14

 

 

 

 

 

 

 

Data Extracts:

 

By asset:

 

 

 

 

 

 

Plant and machinery finance (£m)

636

24

1,782

21

7,334

24

Commercial vehicle finance (£m)

682

-4

2,116

0

8,382

20

IT equipment finance (£m)

146

-51

328

-47

1,695

-32

Business equipment finance (£m)

218

24

494

-1

1,888

7

Car finance (£m)

756

1

2,086

-5

8,502

17

Aircraft, ships and rolling stock finance (£m)

10

-50

44

4

335

-2

 

By channel:

 

 

 

 

 

 

Direct finance (£m)

1,047

-14

2,964

-15

12,564

2

Broker-introduced finance (£m)

566

8

1,668

5

6,648

22

Sales finance (£m)

899

11

2,543

14

10,048

26

 

By product:

 

 

 

 

 

 

Finance leasing (£m)

310

-4

823

-18

3,220

-8

Operating leasing (£m)

594

-3

1,529

-3

6,216

18

Lease/Hire purchase (£m)

1,366

-1

4,222

2

17,245

19

Other finance (£m)

328

26

761

-3

3,319

-1

 Note to editors:

  1. In 2021, FLA members provided £132 billion of new finance to UK businesses and households.  £31 billion of finance was provided to businesses and the public sector. FLA members financed more than a third of UK investment in machinery, equipment and purchased software in the UK in 2021.
  2. At the 2021 Budget, the Chancellor of the Exchequer announced a “super-deduction” for expenditure on qualifying plant and machinery assets. The measure hopes to boost investment by providing an allowance of 130% on new plant and machinery investments that would normally qualify for 18% main rate writing down allowance. The legislation as currently drafted excludes some of the most common ways plant and machinery is used by businesses, including leasing and plant hire. We propose that changes are made to the deduction so that it benefits a much broader range of businesses. The FLA and BVRLA joint briefing paper on Super Deduction can be found here.
  3. For media enquiries, please contact the FLA press office on 020 7420 9656.

 

 

 

 

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