Middle East conflict, rising costs and AI transformation reshape UK asset finance outlook

Finance Connect’s latest UK Asset Finance Outlook H1 2026 reveals an industry navigating growing geopolitical uncertainty, rising operating costs and changing borrowing behaviour, while continuing to identify selective opportunities for growth across key sectors.

The full report – available to download now – provides detailed analysis of market confidence, lending conditions, asset class performance, technology investment, risk trends and operating pressures shaping the UK asset finance industry over the next six months.

Download your copy of the full report by completing the form on the right.

Key findings include:

• Geopolitical instability is reshaping market confidence: Rising oil and gas prices linked to the conflict in the Middle East are increasing inflationary pressure, weakening business confidence and delaying investment decisions.
• Cost of funds expected to increase: Following expectations of further interest rate cuts earlier in the year, lenders now anticipate tighter liquidity conditions and higher funding costs.
• SMEs continue to drive borrowing demand: While consumer and corporate borrowing appetites soften, SMEs remain active as businesses seek finance to support cashflow and operational resilience.
• Technology finance offers the strongest growth prospects: Investment in artificial intelligence, automation and cyber security is expected to drive significant demand for funding.
• Plant, machinery and green assets remain positive growth areas: Businesses are prioritising investments that improve efficiency, lower energy costs and support sustainability goals.
• Commercial vehicle and car finance markets face continued pressure: Rising fuel costs, affordability concerns and ongoing uncertainty around EV residual values continue to weigh on demand.
• Risks and compliance pressures are increasing: Lenders expect higher levels of defaults, insolvencies and fraud, while regulatory and operational costs continue to rise.
• AI adoption accelerates across the industry: Lenders and brokers are embedding AI across onboarding, credit assessment, fraud prevention and operational workflows to improve efficiency and speed.

The Finance Connect UK Asset Finance Outlook H1 2026 captures a market defined by caution, rising costs and selective growth opportunities – providing essential insight for lenders, brokers and industry stakeholders navigating an increasingly uncertain environment.