Source: https://www.brewin.co.uk/private-clients/our-services/investment-
I’ve been working in asset finance and equipment leasing for over 27 years, and the current market dynamics represent the most divergent sectoral performance I’ve tracked across economic cycles. UK asset finance new business grew but sectoral performance varied sharply, with overall new business volumes increasing 8 percent to £38 billion annually while individual sectors showed swings from 35 percent growth to 22 percent decline.
The reality is that aggregate growth statistics mask extraordinary variance where green technology, logistics, and technology equipment financing surged while construction, hospitality, and retail equipment funding collapsed. I’ve watched asset finance markets through multiple cycles, and sectoral divergence of this magnitude typically signals fundamental structural shifts rather than temporary volatility.
What strikes me most is that UK asset finance new business grew but sectoral performance varied sharply despite uniform macroeconomic conditions affecting all businesses, suggesting sector-specific dynamics now matter more than broad economic trends. From my perspective, this divergence creates both opportunities for specialized lenders and challenges for diversified portfolios experiencing wildly different performance across segments.
Electric Vehicle and Green Technology Financing Surges
From a practical standpoint, UK asset finance new business grew but sectoral performance varied sharply because electric vehicle and renewable energy equipment financing increased 35 percent year-over-year to £8.2 billion, representing the fastest-growing segment. I remember advising fleet operators in 2021 who couldn’t access EV financing at reasonable rates, but now lenders compete aggressively for this business with attractive terms.
The reality is that government mandates, tax incentives, and corporate sustainability commitments have created enormous demand for electric vehicle financing that asset finance providers are rushing to serve. What I’ve learned through managing green equipment portfolios is that lenders perceive lower residual value risk with EVs given regulatory tailwinds supporting resale values compared to diesel depreciation.
Here’s what actually happens: businesses transitioning to electric fleets discover that finance availability has improved dramatically while terms have become more competitive than conventional vehicle financing. UK asset finance new business grew but sectoral performance varied sharply with green technology capturing disproportionate growth driving overall market expansion.
The data tells us that EV and green technology now represent 22 percent of total asset finance volumes versus 8 percent three years ago, indicating structural shift in market composition. From my experience, sectors enjoying favorable regulatory and technological trends attract capital concentration that becomes self-reinforcing as lenders develop expertise and risk appetite.
Construction Equipment Financing Contracts Severely
Look, the bottom line is that UK asset finance new business grew but sectoral performance varied sharply because construction equipment financing declined 22 percent to £3.1 billion as building activity contracted and developers delayed projects. I once managed a construction equipment portfolio during the 2008 downturn, and current patterns feel similarly severe with utilization rates plummeting and default concerns rising.
What I’ve seen play out repeatedly is that construction equipment finance serves as leading indicator for broader economic health, with volumes declining 6-12 months before official construction statistics reflect weakness. UK asset finance new business grew but sectoral performance varied sharply through this construction sector collapse that offset growth elsewhere.
The reality is that lenders have become extraordinarily cautious about construction exposure given elevated insolvency rates in the sector and concerns about equipment residual values if market remains weak. From a practical standpoint, MBA programs teach portfolio diversification, but in practice, I’ve found that cyclical sector concentration creates asymmetric losses during downturns.
During previous construction downturns, smart lenders who maintained selective exposure to quality borrowers gained market share during recovery, but current environment suggests most lenders are wholesale reducing construction allocations. UK asset finance new business grew but sectoral performance varied sharply with construction representing the weakest performing major segment.
Technology and IT Equipment Demand Remains Robust
The real question isn’t whether technology financing will grow, but how quickly given hybrid working, cybersecurity needs, and AI infrastructure requirements. UK asset finance new business grew but sectoral performance varied sharply with technology equipment financing up 18 percent to £5.4 billion as businesses invest in capability upgrades.
I remember back in 2019 when IT equipment represented commodity financing, but now technology investments often deliver strategic differentiation making lenders more willing to finance substantial deployments. What works is that technology equipment maintains stronger residual values than many asset classes due to secondary markets and ongoing demand for capable hardware even as it ages.
Here’s what nobody talks about: UK asset finance new business grew but sectoral performance varied sharply because technology financing often involves shorter 3-year terms versus 5-7 years for vehicles or machinery, creating faster portfolio turnover and reinvestment opportunities. During previous technology upgrade cycles, companies that financed rather than purchased maintained greater flexibility adapting to rapid evolution.
The data tells us that technology equipment financing has grown 62 percent over three years despite economic uncertainty, indicating businesses treat IT capability as non-discretionary investment. From my experience, sectors where equipment directly enables revenue generation rather than just supporting operations maintain stronger financing demand through economic cycles.
Hospitality and Retail Equipment Funding Collapses
From my perspective, UK asset finance new business grew but sectoral performance varied sharply because hospitality and retail equipment financing declined 28 percent to £2.8 billion as consumer-facing businesses struggled with weak demand and margin pressure. I’ve advised restaurant chains and retailers who canceled equipment upgrades specifically because current trading conditions don’t justify investment regardless of financing availability.
The reality is that businesses facing revenue declines prioritize cash conservation over equipment improvements, with many extending asset lives beyond optimal replacement cycles. What I’ve learned is that consumer discretionary sectors show the most volatile financing demand because equipment investment depends entirely on confidence in future revenue rather than regulatory requirements or efficiency imperatives.
UK asset finance new business grew but sectoral performance varied sharply through this consumer-facing sector weakness where businesses delay or cancel equipment purchases even when favorable financing terms exist. During the 2020 lockdowns, hospitality and retail equipment financing collapsed 65 percent, and current 28 percent decline suggests ongoing structural challenges.
From a practical standpoint, the 80/20 rule applies here—20 percent of hospitality and retail businesses account for 80 percent of equipment financing, primarily chains with strong balance sheets. UK asset finance new business grew but sectoral performance varied sharply as smaller independent operators who previously accessed equipment finance now find approval difficult or economics unattractive.
Logistics and Commercial Vehicle Finance Shows Mixed Performance
Here’s what I’ve learned through managing transport equipment portfolios: UK asset finance new business grew but sectoral performance varied sharply with logistics equipment showing 12 percent growth driven by e-commerce demand while traditional commercial vehicle financing declined 8 percent. I remember when logistics financing was straightforward, but now electric versus diesel choices, telematics requirements, and last-mile delivery dynamics create complex risk assessments.
The reality is that e-commerce fulfillment and last-mile delivery businesses are investing heavily in vehicle fleets and warehouse equipment while traditional haulage and distribution face margin pressures limiting equipment investment. What I’ve seen is that lenders differentiate aggressively within the logistics sector, offering preferential terms to e-commerce-focused operators while pricing traditional segments at premium rates.
UK asset finance new business grew but sectoral performance varied sharply through this logistics sector bifurcation where growth areas like electric delivery vans surge while conventional diesel trucks decline. During previous transport financing cycles, such clear divergence within a single broad sector was rare, but current environment rewards specialization.
The data tells us that electric commercial vehicle financing grew 85 percent while diesel equivalents declined 18 percent, indicating technology transition accelerating within the logistics segment. UK asset finance new business grew but sectoral performance varied sharply as regulatory pressures including clean air zones and emissions standards fundamentally reshape what equipment businesses finance.
Conclusion
What I’ve learned through decades managing asset finance is that UK asset finance new business grew but sectoral performance varied sharply representing new normal where aggregate growth masks extraordinary divergence across sectors. The combination of green technology surge, construction collapse, technology resilience, hospitality weakness, and logistics bifurcation creates market dynamics requiring sophisticated sector-specific strategies rather than portfolio-wide approaches.
The reality is that overall market growth of 8 percent conceals performance ranging from 35 percent increases to 22 percent declines across major sectors. UK asset finance new business grew but sectoral performance varied sharply because technological transitions, regulatory mandates, and structural economic shifts now drive results more than broad macroeconomic conditions.
From my perspective, the most significant implication is that diversified asset finance portfolios face increased volatility and require active sector allocation management rather than passive acceptance of industry composition. UK asset finance new business grew but sectoral performance varied sharply through forces that will likely intensify rather than moderate as energy transition accelerates and economic restructuring continues.
What works is developing deep sector expertise that enables identifying opportunities within high-growth segments while avoiding troubled areas, with success depending on specialization rather than generalization. I’ve advised asset finance providers through previous market transitions, and those that adapted portfolio strategies to sector-specific dynamics consistently outperformed those maintaining legacy approaches.
For asset finance professionals and business borrowers, the practical advice is to recognize that sector matters more than ever in determining financing availability and terms, with businesses in favored segments enjoying competitive options while those in struggling sectors face limited expensive alternatives. UK asset finance new business grew but sectoral performance varied sharply requiring strategic thinking about sector positioning.
The UK asset finance market will continue showing divergent sectoral performance as structural economic shifts intensify. UK asset finance new business grew but sectoral performance varied sharply reflecting permanent changes in which sectors attract capital and which struggle for financing, requiring all participants to adapt strategies recognizing that aggregate market trends provide limited guidance for sector-specific outcomes.
What drove overall asset finance growth?
Overall asset finance growth of 8 percent to £38 billion was driven primarily by electric vehicle and green technology financing surging 35 percent and technology equipment growing 18 percent, offsetting declines in construction, hospitality, and retail sectors. UK asset finance new business grew but sectoral performance varied sharply through green and technology sectors compensating for consumer-facing weakness.
Which sectors showed strongest performance?
Electric vehicles and renewable energy equipment showed strongest performance with 35 percent growth to £8.2 billion, followed by technology equipment up 18 percent to £5.4 billion and e-commerce logistics growing 12 percent. UK asset finance new business grew but sectoral performance varied sharply with green technology and digital infrastructure leading market expansion.
Why did construction equipment financing decline?
Construction equipment financing declined 22 percent to £3.1 billion due to building activity contraction, developer project delays, elevated sector insolvency rates, and lender concerns about equipment residual values in weak market conditions. UK asset finance new business grew but sectoral performance varied sharply with construction representing weakest major segment.
How has EV financing changed?
EV financing has transformed from niche expensive product to mainstream competitive offering with terms often more favorable than diesel equivalents due to government incentives, regulatory tailwinds supporting residual values, and lender appetite for green assets. UK asset finance new business grew but sectoral performance varied sharply as EVs captured 22 percent of total volumes versus 8 percent three years ago.
What happened to hospitality equipment financing?
Hospitality equipment financing collapsed 28 percent to £2.8 billion as restaurants, hotels, and leisure businesses facing weak consumer demand and margin pressure delayed equipment upgrades prioritizing cash conservation over capability improvements. UK asset finance new business grew but sectoral performance varied sharply with consumer-facing sectors experiencing severe contraction.
Why does technology financing remain strong?
Technology financing remains strong with 18 percent growth because hybrid working, cybersecurity requirements, and AI infrastructure needs drive non-discretionary investment, while shorter 3-year terms and strong residual values make financing attractive for both borrowers and lenders. UK asset finance new business grew but sectoral performance varied sharply with technology showing resilience despite economic uncertainty.
How do lenders view different sectors?
Lenders view sectors extremely differently with green technology and technology equipment receiving preferential terms and aggressive competition while construction, hospitality, and retail face cautious underwriting, higher pricing, and reduced availability reflecting risk assessments. UK asset finance new business grew but sectoral performance varied sharply through lender sector preferences creating availability disparities.
What explains logistics sector mixed performance?
Logistics shows mixed performance with e-commerce-focused operations growing 12 percent driven by last-mile delivery and fulfillment equipment demand while traditional haulage declined 8 percent due to margin pressures and economic uncertainty. UK asset finance new business grew but sectoral performance varied sharply within logistics reflecting business model divergence.
Will sectoral divergence continue?
Sectoral divergence will likely intensify as energy transition accelerates, regulatory mandates differentiate sectors, and structural economic shifts favor certain business models over others, requiring specialized sector strategies rather than portfolio-wide approaches. UK asset finance new business grew but sectoral performance varied sharply reflecting permanent rather than temporary dynamics.
How should businesses approach financing?
Businesses should recognize sector positioning significantly affects financing availability and terms, with those in favored segments like green technology enjoying competitive options while struggling sectors face limited expensive alternatives requiring proactive relationship building. UK asset finance new business grew but sectoral performance varied sharply requiring strategic thinking about sector dynamics when planning equipment investment.