Worst of the credit crunch is 'yet to come', financial chiefs warn

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

Two-thirds of financial chiefs among the country's top 350 companies believe we haven't yet seen the worst of the credit crunch.

The gloomy forecast was made in a second-quarter survey of 83 chief financial officers, representing companies worth a combined £260billion.

Professional services firm Deloitte said 66 per cent disagreed with a May statement by U.S. Treasury secretary Henry Paulson that the worst of the crunch 'is likely to be behind us'.

The findings come a week after business leaders at the British Chambers of Commerce warned of a 'serious risk' of recession as the UK's economic gloom mounts.

Corporate cashflow is coming under increased pressure as the squeeze makes credit harder to come by and more expensive, the survey found.

More than three-quarters (77 per cent) of chief financial officers said credit is hard to obtain, up from 63 per cent in March and 48 per cent in September last year, Deloitte added.

Partner and vice-chairman Margaret Ewing said: 'Tighter credit conditions-have triggered a major change in corporates' attitude to debt. Enthusiasm for raising borrowing - or gearing - has fallen sharply.'

There was also more bad news for the Bank of England rate-setters attempting to keep a lid on inflation despite spiralling oil, food and energy costs.

A majority of respondents, 54 per cent, told Deloitte they were likely to raise prices following the rise in inflation.

Despite the recent falls of the FTSE 100 Index into 'bear market' territory - defined by a decrease of 20 per cent or more from the peak - financial bosses are bullish about prospects for takeover activity, with 49 per cent saying shares look cheap.

Director of research Ian Stewart said it was clear that firms 'expect inflation to bite'.

'CFOs appear to prefer to raise prices rather than see margins be eroded,' he added. 'The big question will be whether demand is sufficiently resilient to accept price rises.'