Total asset finance new business (primarily leasing and hire purchase) fell by 6% in December 2020 compared with the same month in 2019. In 2020 as a whole, new business was 23% lower than in 2019, according to the UK’s Finance & Leasing Association. 

The commercial vehicle finance sector reported new business up by 2% in December compared with the same month in 2019. The plant and machinery finance and IT equipment finance sectors reported falls in new business of 4% and 21% respectively, over the same period.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market continued to show improvement in December, despite ongoing restrictions as a result of the Covid-19 pandemic. The market reported its highest monthly level of new business since March 2020 and the smallest rate of new business contraction since January 2020. 

“The vaccine rollout in the UK has improved the outlook for the UK economy in the second half of 2021. Almost three-quarters of asset finance respondents to the FLA’s Q1 2021 Industry Outlook Survey expected some growth in new business over the next year if uncertainty reduces.”

FLA members provided £113bn in new business in 2020

FLA members across the asset finance, consumer finance and motor finance markets provided £113bn of new business in 2020 to help support business investment and households make essential purchases during the pandemic. 

Of this total, £37bn was provided by non-bank lenders and £16bn went to SMEs, the Finance & Leasing Association reported.

Stephen Haddrill, Director General at the FLA, said: “Our latest figures show the great support that FLA members gave to their customers and the economy in 2020, including to SMEs. Member companies will build on this during 2021, contributing to a full recovery of the UK economy.

“To ensure that FLA members achieve this they need a balanced approach to forbearance from the FCA this year with a focus on tailored support; independent finance companies need to be supported; and clarity and stability on policies for net-zero are required, including recognition of support for technology risk.”