UK and us clash over crunch

UK financial chiefs are at odds with the US Treasury over the impact of the credit crunch.

According to a new survey by professional services firm Deloitte:

- 66% of financial chiefs from the UK's top 350 companies disagree with US Treasury Secretary Henry Paulson's May statement that the worst of the crunch "is likely to be behind us".

- Two-thirds of UK financial chiefs among believe the worst impact of the credit crunch is yet to come.

- A majority of respondents told Deloitte that they were likely to raise prices following the rise in inflation.

The latest downbeat findings come after a week when business leaders at the British Chambers of Commerce warned of a "serious risk" of recession.

Corporate cash flow 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%) of chief financial officers said credit is hard to obtain, up from 63% in March and 48% in September last year, Deloitte said.

Despite the recent falls of the FTSE 100 Index into "bear market" territory - defined by a fall of 20% or more from the peak - financial bosses are bullish about prospects for takeover activity this year with 49% believing shares look cheap.

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

The company's Ian Stewart said: "CFOs appear to prefer to raise prices rather than see margins be eroded. The big question will be whether demand is sufficiently resilient to accept such price rises."