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Look beyond the word recession, says Stephen Sklaroff

The UK is in for a period of low – or no – growth but there is still room for doubt over how long it will last, says Stephen Sklaroff, Finance and Leasing Association director general.“To some extent, the ‘recession’ label isn’t a very helpful one anyway,” he said. 

“It has a technical definition – two successive quarters of zero or negative growth – and tends to cover a lot of variability among economic sectors.”

Sklaroff said the picture remained mixed in the three sectors the FLA represents. The latest (August) annual figures show growth in the motor and asset sectors, while consumer lending contracted. 

In the motor sector, finance provided to consumers for new cars increased by 3% in the year to August on the
previous year, in both value and volume. 

But business finance for new cars dropped by 2% by value and 5% by volume. 

Meanwhile, the business used car sector saw an increase of 7% by volume in the 12 months to August. 

Sklaroff said recent moves by the Government and the Bank of England seemed to be having the intended stabilising effect. But it was likely to take some time for the inter-bank lending market.

“Dealer finance providers have responded to current conditions in a number of ways,” he said. 

“Some offer-incentivised finance packages, which consumers find a very good deal, especially when loan APRs elsewhere are rising. 

“Consumers in some parts of the market have shown signs of moving from HP to leasing and PCPs, probably in response to pressure on household budgets. 

“Dealers are using all the options available to them to find a finance package that suits the customer.”

The FLA’s Specialist Automotive Finance (SAF) scheme has helped, by allowing thousands of dealership staff to prove their understanding of the finance products they sell.

The SAF certificate signals that the dealership has someone able to provide expert advice on vehicle finance. And customers are starting to reap the rewards.

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