The Finance & Leasing Association has today published its recovery plan for the economy – Shaping the UK’s future prosperity: recognising the opportunities for recovery – which recommends a phased approach of short, medium and long-term measures that will ultimately position the UK to meet the Government’s key objectives of achieving a net-zero, low carbon economy by 2050, enhancing economic productivity, and creating a diverse and inclusive prosperity by levelling up the regional economies of the UK.
The short-term imperative is to rebuild consumer and business confidence, and that begins with ensuring that lenders are in a position to lend during the recovery. Over the last three months, so much assistance has been provided to customers in the form of payment deferrals that the availability of new lending to help fund the recovery will be severely curtailed – especially in the case of non-bank lenders which have been supporting customers from their own reserves. The FLA therefore proposes:
- An HM Treasury Forbearance Liquidity Support Scheme to offer funding to lenders to deliver the liquidity they need to help to their customers.
- An extension of the Government guarantees for business and consumer lending until Spring 2021.
- Reform of the British Business Investment (BBI) Direct Lending Scheme so that it works for a wider range of specialist funders of SMEs and consumers who do not have access to Bank of England support. This would greatly increase the availability of funding to SMEs and the lenders who provide point of sale credit to High Street shops.
The medium-term focus must unlock investment for core economic growth, so the FLA proposes:
- The reintroduction of the Annual Investment Allowance’s previous £1 million limit, with no taper, would support businesses growth across the UK. The acquisition of new equipment would also enhance productivity and accelerate the move to more energy efficient assets.
The long-term priority must be to improve our regulatory regime so that it can provide protection in times of crisis, rather than act as an obstacle to quick and effective solutions for customers in financial difficulty. The FLA therefore proposes:
- An overhaul of consumer regulation – specifically the Consumer Credit Act – to make it fit for purpose in the digital age, and to allow for the innovation of new finance products. This is particularly important to aid the transition to electric and low emission vehicles.
Commenting on the recovery plan, Stephen Haddrill, Director General of the FLA, said: “The Chancellor’s Economic Statement set out a range of short-term stimuli, but these measures need to be consolidated with substantive plans for long-term growth – and all of this must start with ensuring that the UK’s providers of business and consumer finance are in a position to lend.
“This is not the case at the moment and without their input, the recovery on High Streets and Industrial Estates will stall.
“We have set out a credible plan that puts the UK on a path to a more sustainable and prosperous future. This is the point when businesses will be planning their next move in terms of investing in new equipment to make them more agile – the Government needs to ensure that funders are in a position to support these ambitions, and that consumer finance lenders are in a position to support the demand for goods.”