UK asset finance market fell by 16% in January 2021

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otal asset finance new business (primarily leasing and hire purchase) fell by 16% in January 2021 compared with the same month in 2020, according to figures released by the Finance & Leasing Association (FLA).

The plant and machinery finance sector reported a fall in new business of 3% in January compared with the same month in 2020. The IT equipment finance and business equipment finance sectors reported falls in new business of 32% and 30% respectively, over the same period.

Geraldine Kilkelly, director of research and chief economist at the FLA, said: “The asset finance market provided more than £2.1bn of new finance to businesses in January despite the ongoing restrictions in response to the Covid-19 pandemic.

Several sectors – agriculture, printing equipment, machine tools – reported higher levels of new business than in January 2020.

“If the UK economy is going to improve its long-term growth potential, there needs to be a significant increase in investment by businesses that enhances productivity and builds a sustainable future.

“With as much as 40% of equipment investment funded by FLA members, the asset finance market will play a vital role in helping businesses achieve these goals.”

Meanwhile, the consumer car finance market reported a fall in new business volumes of 35% in January 2021, compared with the same month in 2020, the FLA said.

The consumer new car finance market reported a fall in new business volumes of 38% in January compared with the same month in 2020. The percentage of private new car sales financed by FLA members in the 12 months to January 2021 held steady at 93.2%.