Economic & Industry Trends12TH April 2011

Robert HulseHead of Direct Professions

Portugal asks for bailout

0

2

4

6

8

10

12

14

Germany US UK France Italy Spain Portugal Ireland Greece

%10 year government bond yields

At at 1/12/10 At 6/4/11 At 11/4/11

Source: FT

Public net borrowing on the rise

0

20

40

60

80

100

120

140

160

180

2009 2010 2011 2012 2013 2014 2015

Government net borrowing forecast (£ billions)

November 2010 forecast March 2011 forecast

Source: Office for Budget Responsibility

Disappointing end to 2010

-8

-6

-4

-2

0

2

4

Q4 05 Q4 06 Q4 07 Q4 08 Q4 09 Q4 10

%Growth in GDP

quarter on previous quarter quarter on same quarter a year earlier

Source: ONS

Business investment recovery on the way?

-50

-40

-30

-20

-10

0

10

20

30

40

50

Q4'05 Q4'06 Q4'07 Q4'08 Q4'09 Q4'10

%

GFCF by sectorGrowth, quarter on same quarter a year earlier

Business Dwellings Government

-30

-20

-10

0

10

20

30

40

50

60

70

Q4'05 Q4'06 Q4'07 Q4'08 Q4'09 Q4'10

%

GFCF by assetGrowth, quarter on same quarter a year earlier

Transport equipment Machinery and equipment Intangibles

Source: ONS

Results of investment intention surveys diverge

-4

-3

-2

-1

0

1

2

3

4

Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11

Scores

Bank of EnglandInvestment intentions over the next 12 months

Manufacturing Services

-40

-20

0

20

40

Q1 '04 Q1 '05 Q1 '06 Q1 '07 Q1 '08 Q1 '09 Q1 '10 Q1 '11

Balance of responses

British Chamber of CommerceInvestment intentions over the next 12 months

Manufacturing Services

Source: Bank of England, British Chamber of Commerce

Consumer trends

-6

-4

-2

0

2

4

6

8

Q4 '90 Q4 '92 Q4 '94 Q4 '96 Q4 '98 Q4 '00 Q4 '02 Q4 '04 Q4 '06 Q4 '08 Q4 '10

Household expenditure% growth

quarter on prev ious quarter quarter on same quarter a year earlier

-2

0

2

4

6

Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11

Inflation measures 12 months % change

CPI CPIY Target rate

-50-45-40-35-30-25-20-15-10-505

10

Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11

GfK consumer confidence index

-20

-15

-10

-5

0

5

10

15

Mar-09 Sep-09 Mar-10 Sep-10 Mar-11

House prices3 months growth trend (%)

Halifax Nationwide

Source: ONS, GfK

Labour market trends

4

5

6

7

8

9

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Unemployment rate (%)

0

500

1000

1500

2000

Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11

000s

Claimant count

0

1

2

3

4

5

6

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Public and private sector earnings’ growth3 months % change

Public sector earnings Private sector earnings

4

6

8

10

Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13

% Unemployment rate forecasts

Source: ONS, Oxford Economics

Economic Forecasts

-6

-4

-2

0

2

4

Q1'09 Q1'10 Q1'11 Q1'12 Q1'13

% GDPquarter on same quarter a year earlier

-30

-20

-10

0

10

20

Q1'09 Q1'10 Q1'11 Q1'12 Q1'13

%Business investment

quarter on same quarter a year earlier

-5

-4

-3

-2

-1

0

1

2

Q1'09 Q1'10 Q1'11 Q1'12 Q1'13

% Private consumptionquarter on same quarter a year earlier

-2

-1

0

1

2

3

Q1'09 Q1'10 Q1'11 Q1'12 Q1'13

%Government consumption

quarter on same quarter a year earlier

Source: Oxford Economics

Bank rate forecasts

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Forecast of Bank rate in Q4 2011

Source: HM Treasury. Forecasts for the UK economy, a comparison of independent forecasts , No.287

Business net lending continues to contract

-10

-5

0

5

10

15

20

Feb-01 Feb-03 Feb-05 Feb-07 Feb-09 Feb-11

%

M4 Lending to private non-financial corporationsNet lending, 12 months % change

0

10

20

30

40

50

60

70

0

100

200

300

400

500

600

700

800

900

1,000

Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10

£bn£m

Outstanding bank deposits and total lending to SMEs

New term lending (lhs) Outstanding bank deposits (rhs)

Source: Bank of England, BBA

Positive start to 2011 for asset finance

-50

-40

-30

-20

-10

0

10

20

30

Feb '09 May '09 Aug '09 Nov '09 Feb '10 May '10 Aug '10 Nov'10 Feb'11

% New business – 3 month growth trend

Total new business Excluding purchase of leasing portfolios

Source: FLA

Core markets report growth

New business by asset1 Feb 11£m

% changey-on-y

3 months to Feb 11

£m

% changey-on-y

12 months to Feb 11

£m

% changey-on-y

New carsUsed carsCommercial vehiclesAircraft, ships and rolling stockPlant and machineryIT equipmentBusiness equipmentPropertyInternational assetsOther

Total (excluding receivables)

Receivables

31440

32424

24367

19414

110114

1,444

13

-3%-23%38%

-71%5%0%

72%-45%

1998%10%

 17%

-31%

1,042130914131739288547

51184446

 4,471

638

1%-19%27%

-51%3%

-14%51%

-56%127%

48% 

9%

244%

5,476583

3,594720

3,3241,0741,871

222631

1,458 

18,951

1,592

12%-11%

7%-46%

4%-15%16%

-12%-59%

8% 

-3%

242%

1. Cumulative totals are subject to rounding differences

Source: FLA

Growth across all channels in February

-50

-40

-30

-20

-10

0

10

20

30

40

50

Feb '09 Oct '09 Jun '10 Feb '11

%

New business growth trend 3 months compared with same period a year earlier

Direct finance Broker finance Sales finance

New business Feb 11

£m

% chgy-on-y

12 mths to

Feb 11£m

% chgy-on-y

By channel

High value

Direct finance

Broker finance

Sales finance

Total

By product

Leasing full payout

Leasing residual risk

Lease/Hire purchase

Other finance

Total

Excluding receivables

214

713

218

311

1,457

211

484

514

247

1,457

1,444

92%

3%

13%

18%

16%

19%

48%

2%

-1%

16%

17%

2,750

10,496

2,981

4,316

20,543

3,933

5,292

7,823

3,496

20,543

18,951

-9%

5%

19%

-3%

3%

18%

-8%

13%

-10%

3%

-3%

Source: FLA

22% of investment funded by FLA members

0

5

10

15

20

25

30

35

Q1 07 Q4 07 Q3 08 Q2 09 Q1 10 Q4 10

% of fixed capital investment funded by asset finance (excludes property and own-account software)

Quarterly market share Annualised market share

Source: FLA

Liquidations and insolvencies

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Q4'05 Q4'06 Q4'07 Q4'08 Q4'09 Q4'10

Number of personal insolvencies(England and Wales)

Debt relief orders IVAs Bankruptcies

Company liquidations Q4 10 % change y-on-y

12 mths to

Dec 10

% change y-on-y

Compulsory liquidations

Creditors’ voluntary liquidations

Total liquidations

Receiverships*

In administration (EA 2002)*

Company voluntary arrangements*

* not seasonally adjusted

1,200

2,755

3,955

302

642

170

-9.9%

-11.8%

-11.3%

-23.9%

-24.4%

-22.4%

4,792

11,253

16,045

1,309

2,831

765

-15.1%

-16.2%

-15.9%

-10.8%

-32.0%

5.4%

Source: Insolvency Service