Brexit and the leasing industry
Brexit has sharpened the government’s focus on the leasing industry and funding SMEs
The UK leasing industry may be getting more recognition from the UK government with the right people in place, according to one senior industry player
SME funding has been a focus of the UK leasing industry for several years now.
With the aid of government incentives, central government subsidies flowed through the Bank of England’s Term Funding Scheme and Funding for Lending schemes into subsidised funding for UK SMEs. Penetration rates for leasing grew as a result.
At the same time, the number of lenders in the market increased, and as a result the wealth of choice for UK SMEs to fund their assets has never been greater.
But with the uncertainty caused by Brexit, SMEs will be expected to expand into international waters and help drive growth and take advantage of the opportunity that has been promised to the country via Brexit during the past two years by the government.
Liam Fox, secretary of state for international trade has encouraged businesses to think big after the UK leaves the EU. At the Conservative party conference in October, he said: “This government, under this Prime Minister, will leave no stone unturned to ensure that Britain claims its due share of global prosperity.
“The choices we make take optimism and courage. We must raise our ambitions and widen our horizons.
“Europe is and will remain an important market for our goods and services, but there is a world beyond Europe and there will be a time beyond Brexit.”
In order to deliver that, a good relationship between government and lenders and sensible policy must result.
While large corporates, international businesses and other London-centric businesses have been well represented publically, it has sometimes been felt that the UK SME community has been under-represented.
Senior leasing industry sources have mentioned to Leasing Life about a lack of engagement from previous government Small Business officials to the leasing and lending community.
Yet at the most recent Conservative party conference, it appears that those sentiments have changed.
There was greater visibility of senior parliamentarians at roundtables organised by the Finance & Leasing Association (FLA) and the European Automobile Manufacturers Association (ACEA), says Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance.
“One of the things that I was delighted to see was the seniority of parliamentarians turning up to talk about SME funding issues and how we can unlock their potential, and how to get the growth going for SMEs, and what problems they are experiencing,” said Wraith-Carter.
“Any previous issue about a lack of engagement with the small business minister and the leasing industry in the past has gone away and it's now clear that they are pushing the issues forward.”
Wraith-Carter says that as Brexit uncertainty has crystallised a little more, despite the political battles, there is a realisation that GDP growth must come from UK business and trade.
“The current government is getting better at helping us to provide small business finance. I think [Brexit] has certainly sharpened the government’s focus on where do we get our prosperity from, and who contributes that GDP. SMEs are 99.6% of all businesses and they employ up to 60% of the workforce,” says Wraith-Carter.
Apart from senior MPs, such as City Minister John Glen, and economics adviser to the Treasury John Redwood, who were at the round table, current small business commissioner Paul Uppal looks a good representative for UK SME leasing funders to the government, said Wraith-Carter.
“The small business commissioner is a great voice. He can make a real difference if he is given the power to do so: he's put some great points and positions out about late payments to SMEs.”
Uppal was appointed in December 2017, and set up his own small business 20 years ago, giving him a wealth of business experience, says Wraith-Carter.
“He's given us more confidence for the next six months and after - I saw a great deal of energy at this year's conference,” he adds.