Last year, FLA members provided new funding of £151bn ($197.15bn) to UK businesses and households. Credit: chayanuphol/Shutterstock.

The latest data from the FLA indicates a downturn in the total asset finance sector, with new business in August 2024 falling by 7% compared with August 2023.

Despite this monthly decline, the cumulative new business for the first eight months of 2024 was still 4% higher than the corresponding period in 2023.

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The commercial vehicle finance and IT equipment finance sectors bucked the trend, registering increases of 5% and 9%, respectively, in August 2024 compared with the same month in the previous year.

FLA chief economist and research director Geraldine Kilkelly said: “A slowdown in fleet new car sales fed through to a weaker performance by the business new car finance sector in August. Demand for plant and machinery and business equipment finance remained subdued, which reflected weak business investment in these assets.

“The FLA’s Q3 2024 Industry Outlook Survey suggested that asset finance providers are cautiously optimistic about the outlook as a lower interest rate environment should provide a boost to investment intentions. More than three-quarters of asset finance respondents to the Q3 Survey expected some increase in business investment over the next 12 months, while 89% anticipated some increase in new business.

“In Q2 2024, FLA members financed 34% of UK investment in vehicles, machinery and equipment, and the industry will play a vital role in supporting the government’s drive to increase business investment levels. With the Budget fast approaching, we urge the government to ensure that leasing is included in the full expensing regime.”

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In 2023, FLA members provided new funding of £151bn to UK businesses and households. Of this, £39bn went to businesses and the public sector.

FLA members also financed nearly a third of the UK’s investment in machinery, equipment and software.