TMA warns not to be fooled by signs of recovery
Britain’s turnaround and recovery professionals, TMA (UK) is warning that recent house price gains and rises in share prices should not be taken as an end to the economic downturn.
According to the group, there is still a severe lack of bank lending to businesses, which in turn has an impact on the capacity of consumers to demand goods and services and the ability of business to finance the supply.
This means that financially sound businesses will continue to go bust as they are not receiving the finance they require.
The Insolvency Service last week revealed the impact of the recession after the number compulsory liquidations and creditors’ voluntary arrangements were up 39.2% in the second quarter of 2009, when compared with the same quarter in 2008.
In addition, receiverships, administrations and company voluntary agreements were up 22.7% during the period when compared with second quarter of 2008.
TMA (UK) President Tyrone Courtman of Nottingham-based Cooper Parry said: “The Insolvency Service figures show that the number of companies closing down is still on the increase, and the reason for that is straightforward: there is just not enough liquidity in the system.”
Mr Courtman cautions not to be fooled by encouraging signs in some sectors of the economy.
“Down on the nation’s shop floor we see cash-starved businesses continuing to disappear, and unless the continuing liquidity crisis is tackled this recession is going to have a very long tail indeed,” concludes Mr Courtman.