FLA sets out recovery plan for UK economy
The Finance & Leasing Association (FLA) has published its recovery plan for the economy, Shaping the UK’s future prosperity: Recognising the opportunities for recovery.
The FLA has recommended a phased approach of short, medium and long-term measures that will 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 diverse and inclusive prosperity by levelling up the regional economies of the UK.
The short-term imperative is to rebuild consumer and business confidence, which begins with ensuring that lenders are in a position to lend during the recovery.
In recognition of the fact that the assistance provided to customers in the form of payment deferrals means that the availability of new lending to help fund the recovery will be curtailed, especially in the case of non-bank lenders, the FLA has proposed several measures:
A 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 small the medium enterprises (SMEs) and consumers who do not have access to Bank of England support.
In the medium-term, the FLA proposed the reintroduction of the Annual Investment Allowance’s previous £1m limit, with no taper, to 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 FLA recommended that the long-term priority be to improve the regulatory regime so that it can provide protection in times of crisis, rather than act as an obstacle.
The FLA therefore proposed 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.
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.”