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October 23, 2012updated 12 Apr 2017 4:05pm

UK asset finance at highest level since credit crunch

The percentage of fixed-capital investment funded with asset finance from the UK's Finance & Leasing Association (FLA) members in the second quarter of 2012 reached 31.4% - its highest level since the third quarter of 2008.

By Charles Wheeldon

The percentage of fixed-capital investment funded with asset finance from the UK’s Finance & Leasing Association (FLA) members in the second quarter of 2012 reached 31.4% – its highest level since the third quarter of 2008.

The asset finance market has grown every month so far this year. In August, the market for deals up to £20m grew by 6% to almost £1.5bn (€1.84bn), and in the eight months to August, this market grew by 9% to £13.6bn.

The strongest growth was in the IT equipment finance sector, with £102m of new business in August, up 35% compared with August 2011. Plant and machinery finance grew by 8% over the same period, to £350m. Following strong growth in the second half of 2011, commercial vehicle finance was 7% lower than in August 2011, at £310m.

FLA head of research and chief economist Geraldine Kilkelly said: "The asset finance industry has reported growth in its core markets in each month for more than a year, while the Bank of England’s published figures for gross lending to businesses have fallen over the same period. As a result, leasing now accounts for the highest proportion of fixed-capital investment in almost four years.

"Over the last year, UK businesses have invested in a wide range of assets using leasing. A recovery in the commercial vehicle market in 2011 has been followed by strong growth in the plant and machinery and IT equipment finance sectors. Asset finance providers currently expect modest further growth over the next year."

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