Oct 2020 | Credit Decisions | Credit risk
By Posted by Toby Sewell

Map regions and local areas against risk and opportunity

There are areas of the economy at risk, but also areas which will grow faster than others. We have modelled this through the creation of our confidence index. Each indicator is ranked amongst local areas and transformed to a specified exponential distribution to generate a score for each area.

These scores derived from six indicators are combined using appropriate weighting to form an overall confidence index.

6 indicators combined to form overall confidence index:

  • Sector composition
  • Occupation profile
  • Demographic profile
  • Unemployment rates
  • House price growth
  • Furlough take-up

Within our index, we can map regions and local areas against risk, or opportunity. Currently (September 2020), areas within the Greater South East dominate the top ranks. Parts of the South West languish at the bottom of the spectrum, with Birmingham’s performance the weakest among the UK’s largest cities. For businesses, having clear, up-to-date insight and foresight into these changing trends will be key to understanding customers’ financial wellbeing and risk.

Watch our video where Experian’s Mohammed Chaudhri, Chief Economist, explaining how the Confidence Index is calculated and how it could support mapping risk and opportunities.