Industry Outlook Survey

Overview

The FLA’s Industry Outlook Survey gauges senior executives’ opinions across the asset finance, consumer finance and motor finance markets about the outlook for the UK economy and the markets they represent.  The Q1-Q2 2024 survey results are based on responses received from 77 FLA members during April and May 2024.

The Q1-Q2 2024 survey showed that members are cautiously optimistic about some improvement in economic conditions, but concerns remain over the extent of the pick-up in confidence and demand, the impact of the General Election on investment intentions, and how long the Bank of England will wait to loosen monetary policy through lowering Bank Rate.  Regulatory challenges and industry-specific issues were adversely affecting the outlook for company performance and financial stability.  Member companies faced increasing operational costs to comply with regulatory requirements and requests. Potential growth opportunities continued to exist from an improvement in the economic environment, investing in technology to drive efficiencies and higher productivity, business diversification, and sustainability initiatives.

In line with the previous survey, the majority of respondents to the Q1-Q2 survey (77%) anticipated some increase in new business over the next 12 months based on the expectation of improved economic conditions.  Over 60% of respondents expected the availability of funding to remain unchanged over the next year, with a further 34% anticipating some increase.  More than a third (36%) of respondents expected staff numbers in their companies to increase slightly over the next 12 months, with 45% anticipating employment to hold steady. The arrears position continued to be positive with over half (52%) of respondents anticipating only a slight increase in the number of customers in arrears over the next year.

In detail

The Q1-Q2 2024 Industry Outlook Survey showed further improvement in members’ optimism about the UK economy across each of the asset, motor and consumer finance divisions. Overall, the percentage of respondents expecting some improvement in economic conditions over the next 12 months increased from 52% in Q4 2023 to 75% in Q1-Q2 2024.  The proportion of respondents that expected some worsening in economic conditions over the next year fell from 35% in Q4 2023 to 16% in Q1-Q2 2024 (see Fig. 1).

The outlook for new business held relatively steady in the Q1-Q2 2024 survey. Overall, 77% of respondents expected some increase in new business over the next 12 months compared with 74% in the Q4 2023 survey. The proportion of respondents anticipating no change in new business over the next year rose slightly from 16% in Q4 2023 to 18% in the latest survey, while those expecting some decrease fell from 10% to 5% (Fig. 2).

The proportion of respondents expecting an increase in the availability of funding over the next year rose from 20% in the Q4 2023 survey to over a third (34%) in the latest survey, while the proportion of respondents anticipating no change fell from 70% in the Q4 2023 survey to 61% in the Q1-Q2 2024 survey (Fig. 3).  The percentage of respondents expecting some decrease in the cost of funds over the next 12 months grew from 63% in the Q4 2023 survey to 75% in the latest survey, while 14% anticipated no change and 10% expected an increase.

The Q1-Q2 2024 survey showed that 45% of respondents expected the level of employment by their companies to remain unchanged over the next 12 months, up from 30% in the Q4 2023 survey (Fig. 4).

Over half (52%) of respondents to the Q1-Q2 2024 survey expected a slight increase in the number of customers in arrears over the next year, down from 66% in Q4 2023. The proportion anticipating the number of customers in arrears to remain unchanged was 27% in the latest survey, while 18% expected some decrease (Fig. 5).

The proportion of respondents to the Q1-Q2 2024 survey expecting some increase in the number of business insolvencies over the next 12 months was 67%, compared with 84% in the Q4 2023 survey.  The percentage of respondents anticipating no change in business insolvencies rose from 10% in Q4 2023 to 26% in the latest survey (Fig. 6).

Similarly, the proportion of respondents expecting some increase in the number of personal insolvencies over the next 12 months fell from 85% in Q4 2023 to 64% in the latest survey.  The proportion of respondents anticipating no change in personal insolvencies rose from 11% in Q4 2023 to 28% in the latest survey (Fig. 7).

Among MFD respondents to the Q1-Q2 2024 survey, the percentage expecting some increase in the number of retail motor dealership insolvencies over the next 12 months was 55%, compared with 52% in Q4 2023.  52% of MFD respondents anticipated only a slight increase (Fig. 8). 

The Q3 2024 Industry Outlook Survey will be published in September 2024.

_{Note to charts: Cumulative totals are subject to rounding differences.}