UK equipment finance market sees 14% drop in H1 2024

The latest asset finance industry index, released by Acquis, has revealed that the value of new equipment finance deals in the UK during the first half of 2024 has seen a 14% decrease on the same period in 2023.

Now in its fourth year, the Acquis Index reports on the value of new lease originations across a wide range of equipment types for UK industry sectors including restaurants, retail, industrial, office and IT equipment.

The latest instalment of the Index has also revealed that lease inceptions for the first half of the year have tracked consistently behind both 2022 and 2023. June saw the most significant drop, witnessing a 30% decline in value of new equipment finance deals. However, July witnessed the first upward trend in a six month period and is potentially an early indication of better performance in the second half of the year.

Across the various sectors, industrial equipment was the only sector to be performing ahead of both 2022 and 2023, reporting an 8.2% increase on 2023. According to the Index, office equipment has seen the biggest decline, experiencing a 20% drop in values of new deals during the first half of 2024, compared with the same period in 2023.

The Acquis Index supports recent figures from the Finance & Leasing Association (FLA) which showed that the total asset finance new business (primarily leasing and hire purchase) had fallen by 7% in 2024, compared with the same period in 2023.  According to FLA figures, the machinery finance and business equipment finance sectors had fallen by 12% and 23% respectively.

“The first half of 2024 has unfortunately not delivered the return to growth in equipment finance we were all hoping for.

“In 2023, the same Index revealed a 4% drop in new originations compared with 2022, but this was still an 18% improvement on the 2021 total value of originations. Despite some fluctuations in the market in 2023, it was hoped that the value of equipment finance deals would remain stable in 2024, but we are now seeing some sectors struggle to grow.

“It’s difficult to pinpoint a single cause behind this drop but a continued period of political and economic uncertainty, alongside the threat of recession lingering in major economies continue to create market unease. In the UK, the General Election has undoubtedly caused some businesses to delay or even pause plans for investment, but a change in government will hopefully stabilise confidence in the market. The recent drop in interest rates, alongside the Autumn Budget may also fuel a return to business investment in the latter part of 2024 but this remains to be seen.”