Steady Growth Reported in UK Asset Finance Sector
The UK’s asset finance market experienced a modest uptick in June 2025, according to the latest figures released by the Finance & Leasing Association (FLA). New business in the sector grew by 1% year-on-year, reaching a total of £3.3 billion ($4.43 billion). This incremental increase aligns with the broader trend witnessed during the first half of 2025, which also recorded a 1% rise compared to the same period in 2024.
Sector Performance Varies Across Industries
While the overall market showed growth, the performance of individual sectors within asset finance was mixed. The commercial vehicle finance sector saw a significant increase, rising 7% to £907 million. Likewise, plant and machinery finance surged by 10% to reach £684 million. The business equipment finance sector also posted impressive numbers, jumping 23% to £168 million.
Conversely, not all sectors fared as well. The IT equipment finance segment experienced a notable decline, with new business dropping 15% to £93 million. Similarly, the car finance market saw a small dip of 2% to £1.1 billion, and finance for aircraft, ships, and rolling stock plummeted 27% to just £32 million.
Finance Acquisition Channels Show Mixed Trends
Different methods of acquiring asset finance also displayed varying levels of performance. Direct finance reached £1.3 billion, showing a growth of 4%. Broker-introduced finance stood at £736 million, rising 2%, while sales finance went up 6% to £1.06 billion.
In terms of finance product types, the market was equally diverse. Finance leasing registered a significant decline of 25%, whereas operating leasing remained flat. On the positive side, lease/hire purchase agreements increased by 4%, and other financial products experienced a dramatic surge of 43%.
Growth in Agricultural and Construction Equipment Finance
Additional gains were observed in niche sectors. Agricultural equipment finance and construction equipment finance sectors recorded growth of 14% and 7% respectively in June, further contributing to the positive trajectory of the asset finance market.
Geraldine Kilkelly, FLA’s Director of Research and Chief Economist, commented on the latest figures: “The asset finance market ended the second quarter with growth across many key sectors, including agricultural and construction equipment. Despite the challenging economic environment, the market reported 1% growth in the first half of 2025 compared to the same period in 2024.”
Economic Outlook and Industry Expectations
Kilkelly emphasized the vital role of asset finance in supporting UK businesses, stating, “The asset finance industry plays a key role in supporting businesses of all sizes to invest and grow, which is vital to getting the UK economy back on track.”
Looking ahead, Kilkelly noted optimism for the remainder of the year. “We expect further cuts in the Bank Rate this year, which will help SMEs considering investment in business equipment, machinery and vehicles. The asset finance industry is expected to report single-digit new business growth by value in 2025 as a whole,” she added.
Government Support and Future Prospects
In a related development, the FLA recently endorsed the UK Government’s announcement of over £4.5 billion in funding for the British Business Bank. This initiative is part of the government’s Backing Your Business plan aimed at supporting small businesses across the country.
This significant investment is expected to further bolster the asset finance market by enabling more small and medium-sized enterprises (SMEs) to access funding for essential equipment and infrastructure, ultimately driving economic recovery and business expansion.
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