Confidence in short-term prospects for the UK
economy has plummeted among leasing companies over the past three
months, although they are more confident that the equipment finance
market will improve, a new survey has found.

Only 1% of UK leasing companies questioned by
the Finance & Leasing Association
(FLA) thought that the UK economy would improve slightly in the
short term, compared to 68% who thought so in the previous
quarter.

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Despite the increased pessimism about
prospects for the general economy, leasing companies were more
optimistic about the future of some parts of the leasing
market.

Nearly half (47%) of respondents expected the
equipment finance market to improve in the next three months,
compared to 21% in the previous quarter.

The increased confidence is borne out by
growth in the UK leasing market, FLA figures also show.

Asset finance deals of up to £20 million grew
7% in the second quarter of this year compared with the
year-earlier period, the FLA also found. Growth was particularly
strong in commercial vehicle finance (21%), general business
equipment finance (16%) and also plant and machinery sector
(10%).

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The biggest drops in leasing business were in
aircraft, ships and rolling stock (-34%) and IT equipment
(-8%).

George Lynn, chief financial officer at Angel
Trains and chairman of the FLA’s Asset Finance Division, said:
“While several recent economic indicators have suggested low levels
of business confidence, our recent survey of expectations in the
asset finance market shows cautious optimism, which is supported by
the continued growth in today’s Q2 figures.”

The survey questioned 33 leasing companies who
accounted for 76% of leasing new business in 2010.