5 July 2021
New figures released today by the Finance & Leasing Association (FLA) show that total asset finance new business (primarily leasing and hire purchase) grew by 106% in May 2021 compared with the same month in 2020. In the first five months of 2021, new business was 26% higher than in the same period in 2020.
The commercial vehicle finance sector reported new business up by 126% in May compared with the same month in 2020. The plant and machinery and business equipment finance sectors reported new business up by 58% and 20% respectively, over the same period. By contrast, the IT equipment finance sector reported new business 29% lower in May than in the same month in 2020.
Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said:
“The broad-based recovery in the asset finance market continued in May as businesses have become more optimistic of a strong economic recovery. The significant growth rates reported in April and May reflect the impact on new business levels of restrictions to deal with Covid-19 during the first lockdown and we expect these to moderate in the coming months. Nevertheless, the industry is on track to return to pre-pandemic levels of new business during the course of this year.
“Our latest research also shows a rebound in the share of UK investment in machinery, equipment and purchased software financed by FLA members which reached 37.1% in Q1 2021. We continue to urge the Government to recognise the importance of the asset finance market in supporting business investment and extend the super-deduction allowance for expenditure on qualifying plant and machinery to include leasing.”
May 2021 |
% change on prev. year |
3 months to May 2021 |
% change on prev. year |
12 months to May 2021 |
% change on prev. year |
|
Total FLA asset finance (£m) |
2,462 |
106 |
8,609 |
54 |
29,993 |
-3 |
Total excluding high value (£m) |
2,340 |
113 |
8,145 |
53 |
28,020 |
-2 |
|
|
|
|
|
|
|
Data Extracts:
By asset: |
|
|
|
|
|
|
Plant and machinery finance (£m) |
590 |
58 |
1,940 |
40 |
6,489 |
-1 |
Commercial vehicle finance (£m) |
657 |
126 |
2,269 |
74 |
7,950 |
3 |
IT equipment finance (£m) |
120 |
-29 |
449 |
-20 |
2,265 |
-21 |
Business equipment finance (£m) |
136 |
20 |
469 |
18 |
1,746 |
-17 |
Car finance (£m) |
671 |
340 |
2,405 |
71 |
8,094 |
-2 |
Aircraft, ships and rolling stock finance (£m) |
52 |
120 |
148 |
110 |
388 |
-21 |
By channel: |
|
|
|
|
|
|
Direct finance (£m) |
958 |
85 |
3,466 |
27 |
12,733 |
-11 |
Broker-introduced finance (£m) |
549 |
131 |
1,892 |
86 |
6,215 |
5 |
Sales finance (£m) |
833 |
145 |
2,786 |
77 |
9,072 |
8 |
By product: |
|
|
|
|
|
|
Finance leasing (£m) |
210 |
20 |
836 |
19 |
3,505 |
-8 |
Operating leasing (£m) |
441 |
217 |
1,620 |
72 |
5,843 |
-2 |
Lease/Hire purchase (£m) |
1,486 |
111 |
4,880 |
55 |
16,042 |
-3 |
Other finance (£m) |
250 |
52 |
934 |
39 |
3,565 |
4 |
Note to editors:
- In 2020, FLA members provided £113 billion of new finance to UK businesses and households. £27 billion of finance was provided to businesses and the public sector. FLA members financed almost a third of UK investment in machinery, equipment and purchased software in the UK in 2020.
- 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.
- For media enquiries, please contact the FLA press office on 020 7420 9656.