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|How will Brexit vote affect CICM CMI headline survey?|
|Friday, 17 June 2016|
The first indication of how the economy may be affected by the Brexit referendum could come from the results of Q2 2016 of the Chartered Institute of Credit Management’s (CICM) Credit Managers’ Index (UK CMI). Credit Managers are being urged to take part.
A continuation of the downward trend from the 7.1 percent fall in Q1 would be a sign that the instability in the manufacturing and services sectors has continued.
Contrasting against previous all-time Index highs recorded in the first two quarters of 2015, the new survey will be important in determining whether 2016’s poor start to business confidence continues or improves.
A recent survey suggested almost a third of Credit Managers, those at the heart of determining risk and managing cash through a business, would vote to leave the EU, with almost half believing that Brexit will have little or no impact on their business.
Philip King, Chief Executive of the CICM, says that whatever happens in the vote, a further fall in confidence would be a genuine concern: “The sharp contrast in fortunes of the economy from the end of the year, to the beginning of 2016 set alarm bells ringing. If this pattern is set to continue the economy could be on the path to another potential economic slowdown.”
The Index, sponsored by Tinubu Square, is important because it gauges nationwide levels of credit being sought and granted by credit managers across both the manufacturing and services sectors. It therefore acts as a primary indicator of actual levels of business being conducted.
To continue to be a genuine gauge of the state of the economy requires the input of credit managers: “Without the responses of those members at the forefront of businesses of all sizes, in all sectors quest to collect cash, this barometer would not be the important indicator it has become. We urge everyone in these positions to take part,” Philip continues.
The CMI is a diffusion index producing ‘scores’ of between one and 100 (typically in a range of 40-60). Ten equally weighted factors are included – three favourable and seven unfavourable – and the Index is calculated on a simple average Credit Managers’ views and statistics are sought on such issues as applications for credit through to days sales outstanding.
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