Finance directors need to retain control of the corporate agenda in the coming months and run their business on a cash basis to avoid falling victim to a liquidity trap, Tesco’s Andrew Higginson told today’s Financial Director Summit in Hampshire.

Higginson warned the UK was only at the beginning of the slowdown, with the problems that have ‘messed up’ banks yet to impact fully on the wider economy. ‘We are almost certainly in recession at the moment and all the consequences of that are yet to play out,’ he said.

Higginson, recently promoted to chief executive of retailing services but continuing in the FD role until a replacement is found, urged delegates to manage their businesses within their means.

‘If you haven’t got liquidity you are going to find it hard to get at the moment,’ he said. ‘Keeping control of the agenda, avoiding the tender loving care department of the banks, avoiding “Something Must Be Done” syndrome is really at the forefront of what you should be doing at the moment and in the coming weeks and months.’

He warned ‘cash could kill’, with too many businesses ‘sleepwalking’ to their collapse by focusing on earnings instead.

At the same time he said it was essential businesses continued to invest and not assume growth was impossible despite torrid market conditions. Despite tight credit markets, in May Tesco purchaseed a South Korean hypermarket chain in May for nearly £1bn – the supermarket’s biggest-ever deal.

And he said FDs should manage carefully their relationships - and make their company important in the eyes of their bankers.

'It's better to owe a lot of money to a few banks,' he said, rather than a little to many.