In addition to seeing arrears grow to 4
percent, UK finance companies saw year-on-year new business fall by
an average of 30 percent in February, according to the latest data
from the Finance & Leasing Association (FLA).

According to the FLA, at the end of February,
the percentage of outstanding business finance contracts in arrears
– contracts down by two payments or more – stood at 4 percent, up
from 2.6 percent in February 2008.

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The upward trend in arrears is “expected given
current economic conditions”, said the FLA.

Regarding the fall in new business volumes,
FLA data showed that contracts signed through hire purchase
agreements were the worst hit, with lessors seeing new business
fall to £489 million (€541 million), down by 43 percent
year-on-year from the £864 million written in February 2008.

Operating leasing and finance leasing also saw
a considerable year-on-year slide, down by 26 percent and 20
percent respectively, to £399 million and £313 million.

In the 12-month period leading to February,
lessors wrote a total of £8.7 billion worth of new hire purchase
business, down by 18 percent; while new operating leases were flat
over the year, at £6.4 billion, and finance leases down just 7
percent, to £5.6 billion.

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Separate data published by the Insolvency
Service, supported the FLA’s arrears figures, showing that company
liquidations grew in Q408 by almost 52 percent and by 24 percent in
2008 as a whole.

In addition, companies in administration under
the Enterprise Act 2002, which made it easier for companies to be
rescued, grew by more than 92 percent last year.

Jason T Hesse