IT and plant and machinery dip
in both UK and Germany. Fred Crawley reports.
Go deeper with GlobalData
German new business growth has
outstripped that of the UK for the second quarter, figures from the
countries’ leasing associations show.
German leasing volumes for the
quarter grew by 3.7% year-on-year, the first such growth since
2009.
In the UK, FLA members reported
that second-quarter business was up 2% to £4.79bn (€5.83bn), the
first recorded growth since 2008. FLA figures for June show a 26%
interannual jump.
The upswing in volumes mirrors GDP
gains in both countries. German GDP grew 2.2% compared to the UK’s
1.1%.
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By GlobalDataMuch of Germany’s storming GDP
progress was fuelled by improving export sales rather than domestic
investment – a situation that BDL (Bundesverband Deutscher
Leasing-Unternehmen) says did not particularly boost leasing
business.
BDL says it would take a
corresponding increase in domestic capital investment to drive
growth in leasing.
“For the whole year our expectation
is for a small increase or ‘schwarze null’. We will need to keep
watch on investment figures,” a BDL spokesman said.
The FLA is keeping a close eye on
demand for capital investment through leasing as well.
“Any sign of growth is good news,
but the severity of the drop in business investment during the
recession means that a return to pre-crunch levels is still a long
way off. In the meantime, many businesses are living with equipment
that doesn’t meet their needs for the recovery,” Julian Rose, FLA
head of asset finance, said.
As a recovery takes hold, two
asset-specific trends have emerged in both markets. IT equipment
finance for the second quarter fell 10% in the UK and 7.2% in
Germany. This is curious given that many funders claim to be
stepping up their efforts in IT.
Plant and machinery finance also
dropped 7% in the UK and 7.5% in Germany.
Leasing penetration rates in both
the UK and Germany declined in 2009. Germany’s equipment leasing
penetrations figure fell from 22.1% to 21.2%.
The challenge now is to position
leasing as a driver of business recovery.
Rose said: “We believe the government could do more to help
businesses to invest by streamlining accounting and taxation
regulation and by extending its programme of small business loans
risk support to include asset finance.”
