Press Release
8 January 2009 | INTEREST RATE CUT WON'T STOP LIQUIDATIONS, WARNS TMA
The Bank of England's 0.5% cut in interest rates, announced today, will only add to the liquidity crisis that is forcing many small and medium enterprises into liquidation, says TMA (UK) Director Alan Tilley.
The ability to secure appropriate finance was one of the essential pillars of successful turnarounds, he said, and without it more businesses in distress would go to the wall.
“To achieve a successful turnaround we need four things,” he said. “We need a viable business core, credible management, a valid business plan, and appropriate finance.
“Turnaround professionals can spot a viable business core, can create credible management, and can prepare a valid business plan. But appropriate finance is the missing factor, which means that many businesses that could be recovered are having to go into liquidation.
“As well as contributing to unemployment and reducing tax revenues, more liquidations will mean that Britain will emerge from the recession with a significantly weakened business base.”
Mr Tilley said that interest rate cuts would prove no more effective in stimulating the economy than the 2.5% VAT reduction and added: “It's not the cost of finance that's the problem for SMEs – it's the availability. The Government has to find other ways of strengthening the banks' balance sheets.”
* Alan Tilley is chairman of Bryan, Tappy & Tilly, independent turnaround practitioners of London and Frankfurt.
Further information:
Tyrone Courtman, President TMA (UK) – 01332 295544 – tyrone@cooperparry.com
Alan Tilley, Director TMA (UK) – 01865 858738 – atilley@btandt.eu
Issued by Kickstart PR: Ted Bruning – 0844 80 40 550 –ted@kickstartpr.com