Well, 2023 was one hell of a year.   We started off the year with a very gloomy economic outlook and a continuation of the “Cost of Living Crisis”.  Rising inflation, borne out of the emergence from lockdowns and which was originally seen as a “blip” by most central banks, was now entrenched and accelerated throughout the year.  As a result, the banks were forced to continue to utilise their main tool to combat inflation;  interest rates.   The ECB base rate in Jan 2022 was 2.5%, the U.S. Fed’s at a range of 4.25% to 4.50%, and the BOE at 3.5%.   Thankfully, at the end of Q3, inflation started to moderate and at the last rate rises, we’re now at ECB 4.5%,  the Fed’s range at 5.25% to 5.50%, and the BOE at 5.25%.   It could have been a lot worse.

Whilst the banks continue to take a hawkish tone and warn that rates will be “higher for longer”,  many economists and the markets are hedging bets that central banks may start to lower interest rates as early as Q2 next year.  It will all depend on the data over the coming months.   There is an argument that the interest rate rises this year have not yet started to significantly impact the macro-economic environment and that the real economic damage will come in 2024.  Time will tell what the full impact will be but we have seen inflation slowing but also growth is slumping and forecasts for GDP in 2024 have been adjusted downward.

As I state in every newsletter, these are career-defining events for Credit professionals.  Our job is to prognosticate the future or what we in the Credit industry call, “crystal ball gazing”.   Our job is to protect our company’s debtor asset, manage risk of Bad Debt whilst continuing to support revenue growth even during difficult times such as these.  All the Credit “veterans” have their “war stories” from past financial crises and the coming years will provide more than ample fodder for more

However 2024 turns out, there is one thing I can guarantee;  it won’t be boring.

On a more positive note, AICDP has been busy planning our 2024 event calendar and we’ve got some exciting, informative and engaging webinars & events lined up.  Stay tuned for more !

I and the entire AICDP wish all of you a very Merry Christmas and a Happy New Year (whatever it brings) !

The future influences the present just as much as the past –  Friedrich Nietzsche