Government sacred cows endanger UK turnaround
The UK branch of the Turnaround Management Association (TMA) is warning that Alistair Darling’s bid to postpone tackling Britain’s debt mountain until after next year’s General Election creates a real risk of the country’s credit rating being downgraded.
The body, which represents practitioners in corporate renewal and turnaround management, believes the delay could have “severe” medium-term consequences for British business and would prefer the Chancellor to face up to the biggest deficit in living memory right now.
TMA UK director, David Hole, describes Mr Darling as “in a corner” but while acknowledging that tax increases and spending cuts will make the Government unpopular during an election year, he asserts: “Taking tough decisions is the basic requirement in any successful turnaround. There can be no sacred cows.”
According to Mr Hole: “You can’t cure a depression caused by excessive debt with yet more debt!”
At the same time, the director highlights some positive elements of last week’s pre-Budget report, such as the continuance of rate relief on empty commercial properties and the extension of the Enterprise Finance Guarantee, which he believes should take some of the pressure off business.
Last week, credit ratings agency Moody’s warned that the UK could face a sovereign downgrade by 2013, if debt is not kept under control.
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