Total asset finance new business (primarily leasing and hire purchase) fell in December 2021 by 2% compared with the same month in 2020, according to the Finance & Leasing Association (FLA).
In 2021 as a whole, new business grew by 14% compared with 2020 to £31.3bn but remained 12% lower than in 2019.
The plant and machinery finance and business equipment finance sectors each reported new business up in December by 24%, compared with the same month in 2020.
By contrast, the IT equipment finance sector reported a further fall in new business of 51% over the same period.
Geraldine Kilkelly, director of research and chief economist at the FLA, said: “The asset finance market rebounded strongly in 2021 with growth reported across many sectors.
“The plant and machinery finance sector returned to pre-pandemic levels of new business as new finance for construction equipment and agricultural equipment grew by 39% and 18% respectively.
“Asset finance new business provided to SMEs was also within touching distance of its 2019 level, reaching £19.9bn in 2021.
“The pace of recovery in some asset finance sectors has been disrupted by heightened Covid-related uncertainty as new waves and variants emerged, and by global shortages of materials, goods and labour. While economic and market conditions will remain challenging this year, supply issues are expected to ease, and business investment is expected to recover as the year progresses. The FLA’s Q1 2022 industry outlook survey shows that 90% of asset finance providers expect new business growth over the next twelve months.
“FLA’s latest figures show the importance of asset finance to SMEs who account for more than 99% of all UK businesses. We, therefore, continue to urge the Government to extend the super-deduction allowance for expenditure on qualifying plant and machinery to include leasing so the industry can support more businesses to recover and grow.”