UK Finance & Leasing Association members lead the way in productivity levels

New research, launched last week at the Finance & Leasing Association (FLA)’s national asset finance conference, shows that productivity among FLA members providing asset finance (leasing and hire purchase) is almost seven times higher than the national average.

The research carried out by Oxford Economics measures FLA members’ contribution to the UK economy in 2014.  The level of productivity for the asset finance industry, measured in terms of output per worker, puts it in the top 2% of all UK industries.

In 2014, FLA asset finance members provided £26 billion of new finance, primarily through leasing and hire purchase, to support investment in all kinds of equipment by UK businesses.  This represented almost 28% of all UK investment in machinery, equipment and purchased software. About 60% of asset finance new business went to small and medium sized enterprises last year.

Simon Goldie, head of asset finance at the FLA, said: “Leasing and hire purchase can make the difference between firms getting the equipment they need to thrive, or being left behind. Asset finance should be part of the conversation any business-owner has when thinking about investment.”

FLA members’ contribution to UK’s GDP

Oxford Economics reports that, in 2014, FLA members contributed £11.0 billion in Gross Value Added, GVA, to the UK economy. This equates to 0.6% of all UK GDP, similar in scale to the UK advertising or hotel industries.

In total, this activity supported the employment of 76,700 people in the UK, 0.2% of all UK employment.

The largest share was produced directly by FLA firms, with a direct contribution to GDP worth £9.0 billion and 35,000 jobs. The majority of this activity (70%) comes through the provision of consumer finance.

FLA members also support UK firms through their purchases of goods and services. This contributed a further £620 million in GVA and supported 13,300 jobs.

The employment supported by FLA members and their supply chains generates further consumer spending. This contributed £1.4 billion to GDP and employment of 28,400 in 2014.

The impact that FLA members’ provision of Business Finance has on investment spending

FLA members provided a total of £26 billion in finance to businesses in the UK in 2014. The investment that this supported equated to 28% of all UK business investment in ICT equipment, software, other machinery and transport equipment.

Through the business investment supported by this finance, the UK manufacturing sector generated an extra £4.2 billion in GDP and 62,400 jobs, 2.8% of all UK manufacturing output and 2.4% of UK jobs.

The impact of a faster growth in FLA members’ new business levels

The report also considers a scenario where FLA members’ lending grows significantly (10 percentage points a year faster than the current forecast for growth in consumer spending and business investment). It then uses the Oxford Economics Macroeconomic Model to analyse the impact through its contribution to consumer spending and business investment.

The analysis shows that, if this faster rate of new business growth were enabled, FLA members could support an increase in GDP of 1.75% or £33.8 billion by 2019.

Employment would rise by a total of 329,900, a 0.95% increase.

FLA members overall – Total Economic Contribution of FLA members ‐ 2014

FLA business finance members – Total Economic Contribution of FLA business finance members ‐ 2014

FLA new business – Composition of FLA Members’ New Business ‐ 2014