Britain’s top 350 companies plan to cut spending and jobs and to dispose of assets as they struggle to cope with the credit crisis, but only a few are considering cutting dividends, according to a survey by Deloitte, the accounting firm.

Deloitte interviewed finance directors of British companies with a combined market capitalisation of almost £100 billion and found that credit conditions had worsened in this year’s first quarter, even when compared with the depths of the credit crunch in the second half of last year. About 73 per cent of finance directors said that credit was more expensive, up from 64 per cent last December.

Sixty-two per cent said that credit had become more difficult to secure, up from 48 per cent last September.

Ian Stewart, associate director of Deloitte Research, said, however, that finance directors continued to prefer bank loans to raising cash via rights issues or bond issues. “Debt markets are, for a lot of companies, closed or disrupted and equity markets have weakened or are undervalued, so that’s not an attractive option,” he said. “So they still say that their first port of call is their banks.”

Finance directors believe that the credit crunch has at least six months left to run and 44 per cent of them plan to raise the gearing of their company in the next 12 months. Despite a rights issue of about £10 billion expected to be announced by Royal Bank of Scotland tomorrow, Mr Stewart said that finance directors “overwhelmingly say that now is not a good time to raise equity”. Seventy-eight per cent feel that equity in their company is undervalued, up from 69 per cent in December.

Discretionary spending, such as travel, entertaining and training, will be the first to go as the credit squeeze continues. More than half of companies plan to slow down hiring and almost 40 per cent are considering cutting workforces. Just under a third plan to sell assets to raise capital.

Only 3 per cent would consider cutting payments to shareholders to save cash. Mr Stewart said: “The dividend is seen as a signal of long-term strategy.”

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