Executive Summary
As businesses and consumers increase spending and once more start to borrow,
finance houses are enjoying booming business. In particular, sales of big
ticket leasing for items of £5m or more are considered to be at the start
of a period of substantial growth. At the same time in the consumer market,
sales of unsecured personal loans and retailer store cards are buoyant.
By the end of 1996 at current prices, sales through finance houses are forecast
to reach nearly £54bn, a year-on-year increase of 34.2% against 1995. An
explosive rate of growth is forecast to continue until the second half of 1997,
after which the pace is likely to moderate, with annual increases of between
10% and 12% over the following 3 years.
Key Note forecasts that by the year 2000 at current prices, sales of business
and consumer finance will reach £92.8bn, an increase of almost 72% over
1996. The biggest growth is predicted in the sales of consumer finance (up
74.4%), which at £51.6bn represents 55.6% of the total. Over the same
period, sales of finance for business will reach £41.2bn (up 69%).
In 1995, finance houses and other specialist lenders supplied 26.2% of the UK's
consumer credit and 17.1% of its business finance. The total available market
in that year was valued at £189.7bn, of which finance houses captured
£40.2bn, a level of penetration of 21.2% which has increased from 16.5%
(up 4.7%) since 1991.
Significant growth is reported in business finance for plant and machinery and
commercial vehicles, and leasing is once more gaining in popularity, a reversal
of the trend towards lease/hire purchase prevalent between 1992 and 1994. The
star performers for 1995 in consumer finance were credit cards, unsecured
personal loans and retail store cards.
The run up to the General Election due by 22nd May 1997 at the latest, is seen
as a period of sustained growth for the finance house industry, followed
possibly by a short-lived boom as potential house purchasers who have deferred
purchases to await the outcome of the Election, move ahead before new
legislation can be enacted. From the end of 1997, however, and for the
following 3 years, the market is likely to return to a more traditional rate of
progress.
Tenth Edition 1996
Edited by Richard Caines
ISBN 1-85765-624-5
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