A positive start to an uncertain year

Despite all the uncertainty surrounding Brexit, the sectors in which UTB predominantly operate appear to have been remarkably resilient throughout 2018. We had one of our best ever six-month periods leading up to Christmas and we’ve been able to retain a strong market share without racing to the bottom. Going the extra mile on broker service and making sound commercial judgements when underwriting still mean a lot to brokers under constant pressure from vendor and direct sales forces, so in 2019 we’ll keep doing what we do best.

And then there’s the bigger picture. As I write, Theresa May is battling to hang on to her leadership and trying to find a way to broker an improved Brexit proposal following a resounding rejection of her original deal by Parliament. What happens in the next few weeks (or even days!) will be critical in how this year might pan out for the UK economy. Whether ‘leaver’ or ‘remainer’, I think we can agree that we would all benefit from having greater certainty of what our future relationship with the EU will look like.

But various things may happen in the next few weeks. Mrs May could finally decide she’s had enough and resign as leader of the Conservative Party and therefore as PM. The Government has seen off one vote of no confidence but there may be more. There is still a very real prospect of a general election and preparations for a ‘No Deal’ Brexit (an outcome most people don’t want) are being accelerated.

Despite this almost unprecedented economic uncertainty, UTB are off to an exceptionally busy start to the year, during what is traditionally a quieter time within the asset finance industry. Maybe customers have decided that their own businesses need to continue investing if they are to grow and compete, and they can’t keep waiting for Westminster to make up their minds and finally come to a consensus on the way forward.

Hopefully this excellent start within our sector is not a false dawn, and as we approach March 29th without a viable plan yet in place there is a danger that more businesses will be tempted to watch and wait to see what happens before committing to further investment in new vehicles, plant and machinery. If this does happen many funders will be playing catch up for the rest of the year. What will that mean for funders in an already crowded marketplace? More pressure on margins no doubt and some lessors may feel pressured to compromise on credit quality just to maintain turnover. If stormy weather does indeed lie ahead this may just be storing up problems for the future and some funders’ resilience could be sorely tested.