Coventry experts beacon of hope ahead of comprehensive spending review
(Reported in Coventry Telegraph 10 September 2010)
THE Comprehensive Spending Review may not spell doom and gloom for businesses, according to a Coventry-based insolvency expert.
Tony Mitchell, managing director of leading city centre-based insolvency practice Cranfield Business Recovery, said that while insolvencies could rise, it would not necessarily lead to a double-dip recession.
He said that his company was adopting a positive approach to the situation by offering early assistance with services like sourcing private investment to help struggling businesses turn themselves around and put strategies in place to avoid formal insolvency.
“A high percentage of businesses in our region will be affected by the spending cuts, either directly or indirectly,” he said.
“It’s impossible to extract a significant amount of money from the economy without it impacting on all sectors. The impact will not be felt in this quarter but in the first quarter of next year and we could see insolvencies rise but it will not necessarily be a double dip.”
“At Cranfield what we are trying to do is move away from the negatives and help companies put together strategies and turnaround packages to avoid insolvency in the first place.”
This week’s Comprehensive Spending Review is expected to outline the biggest budget cuts since World War II, with the impact and aftershock likely to be felt in both the public and private sector.
Reports have suggested that around 50,000 firms nationwide, many of whom are already experiencing financial difficulties, will be at risk as a result of the CSR. Industries experiencing difficulties include construction, recruitment, IT, advertising and business services.
Other commentators have gone further to say up to 70 per cent of firms will be hit with public sector cuts potentially jeopardising up to 500,000 private sector jobs.
Graydon Insolvency Predictor has revealed an anticipated rise in insolvencies early next year as the impact of public spending cuts starts to take effect, leading to a possible ‘double-dip’ recession
Mr Mitchell added: “There are a lot of companies out there at the moment that are being supported by HMRC and there is a lack of desire among the banks to force companies to cease trading. Also, creditors realise there is not much money about and are unwilling to force companies into insolvency.”
“The net result is that many businesses simply should not be trading and wouldn’t be under normal circumstances. If there’s a further squeeze on cash flow, it could be the final straw for many but by identifying potential problems at an early stage with expert advice could prevent a worst case scenario for many.”
