Austerity cuts have arrived. After an uncertain summer, the
waiting is over.

As Leasing Life went to
press, a mass rally of union representatives from across Europe was
convening in Brussels in protest against government cutbacks.

In Spain, unions were poised for their
first general strike in eight years, in response to a budget that
slashed public spending.

Greece, Ireland, Poland, Portugal,
Romania and Serbia were all braced for similar protests.

In the UK, the government presents the
results of its Comprehensive Spending Review to parliament on 20

Until then, there remains a great deal
of uncertainty in the country as to where the deepest cuts will

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Government departments have spent the
summer months engaged in a fierce fight to protect their

The public sector accounts for huge
proportion of Europe’s overall capital expenditure.

Reducing this spending power
potentially opens the door to more leasing.

Threat or

Barclays Marine Finance’s decision to
pull out of the boats market is a sign that retrenchment and
restructuring in the asset finance sector is not over yet.

The water is still choppy. Fortis
Lease’s exit from motor finance is another reminder of the
volatility that remains in the market.

Such moves open up the opportunity for
new funders to enter by acquiring an established book. The quality
of the business should be attractive, but the fact that no buyer
has come forward suggests there is no immediate appetite for
leasing from investors.

If you throw into the equation the
growth of commercial and consumer markets in China and India, then
the reluctance is less surprising.

Lending directly into an untapped
market with a lower cost base could certainly appear a more
attractive option than buying a European book.

Levels of penetration of leasing
remain strong in many markets across Europe. Asset classes with a
culture of leasing have enjoyed a degree of stability reflecting
expert management by funders.

Close links to customers and expertise
in managing risk make leasing an attractive option for the
cash-strapped public and private sectors.

As times remain tough, lessors should
shout about the benefits of asset-based finance.

Liz Bury