Three events that shook the world, how Leasing Solutions can help economic recovery from Covid-19

During the past thirty years there have been three events that have presented a major challenge to the UK economy and asset finance industry.

To understand more it is worth looking, at each of the events and in particular to examine the impact each had on the availability and cost of asset finance.

The first event came in the early 1990s and brought the last of the pre-globalisation UK recessions. A short period of very high interest rates followed years in which businesses and consumers had built up huge levels of debt, a toxic combination which saw many home-owners plunged into negative equity and very high levels of business failures. Banks and leasing companies saw a large increase in bad debts, often originating from companies who appeared to be financially strong before suddenly collapsing. Unsurprisingly the result was a very severe reduction in credit appetite and an inability of our industry to help in the early stages of economic recovery.

From the mid-1990s we saw a decade of solid economic growth, reducing interest rates and the leasing industry playing a full part in supporting business expansion, but then in 2008 came the second of the three events, a global financial crisis. Unlike a ‘normal’ recession, this crisis culminated in the banks having insufficient funds to support their consumer and business customers. The availability of credit significantly reduced, and, at least initially, the cost of borrowing increased. Some major leasing companies simply had no funds available and withdrew from the market, so as with the 1990s recession, the industry as a whole was in no position to support businesses as they tried to recover.

We are now living through the third event, a global health pandemic in which significant sectors of the economy have been effectively closed for prolonged periods of time. The UK Government has borrowed billions of pounds to provide some short-term relief for both individuals and businesses, but most economic forecasts suggest that certain sectors and individual businesses might never fully recover. In these circumstances of uncertainty one might expect to see the finance industry take a very cautious approach to credit. It is therefore encouraging to learn from our credit managers that they are adopting a ‘business as usual’ approach.

Andy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.