UK asset finance adapts to shifting risk, regulation, and SME demands

The Asset Finance UK Outlook Report for H1 2025, brought to you by Asset Finance Connect, provides a comprehensive, forward-looking analysis of the asset and auto finance markets as we enter a pivotal year for the industry.

Amid continuing macroeconomic uncertainty, rising cost pressures, and regulatory change, the first half of 2025 begins with cautious optimism. Small and medium-sized enterprises (SMEs) remain committed to investment but face mounting constraints – from increased employer National Insurance contributions and the rising National Living Wage to escalating geopolitical risks affecting global trade.

Key findings at a glance:

• SME sentiment: Investment appetite remains, but borrowing hesitancy is increasing as SMEs prioritise cashflow.
• Geopolitical tensions: Ongoing uncertainty around tariffs is weighing on SME confidence and operational planning.
• Lending dynamics: Non-bank lenders – especially captive and independent houses – are stepping in where banks retreat, despite tighter margins.
• Green finance challenges: While demand for sustainable assets continues, unreliable residual value data for electric vehicles is curbing lender confidence.
• Regulatory headwinds: Three major commission disclosure cases currently before the Supreme Court are reshaping broker-lender relationships and raising compliance costs.
• Digital evolution: Artificial intelligence is streamlining operations, but personal relationships remain a cornerstone of effective asset finance.
• Flexible finance: Demand for tailored repayment models is growing, yet most as-a-service pricing structures remain underdeveloped.

Drawing on exclusive data from AFC’s confidence survey conducted in March 2025, alongside interviews with key industry leaders, the report provides the clarity required to make informed strategic decisions in an evolving landscape.

With insights tailored to support finance providers, brokers, manufacturers, and SMEs, the H1 2025 Outlook Report is your essential guide to the risks, innovations, and growth opportunities ahead.

Download the UK Asset Finance Outlook H1 2025 now by completing the form and stay ahead of the trends shaping our sector.