Around a third of Britons predict that their disposable income will drop this year, new figures have shown.
This group expects pay cuts or rising costs to take hold over the coming months as the recession bites, according to Virgin Money’s Financial Outlook Index.
The study also identified an “alarming lack of confidence” among consumers over their ability to meet costs in areas such as mortgage or insurance payments, something that could lead to debt management problems.
In addition, around 42 per cent of those polled said they will not be able to afford luxuries this year, while 34 per cent stated they will be unable to add to savings.
“We cannot trivialise the effects of the economic downturn … it is clear there is a mood of caution throughout the country,” remarked Rob Clifford, the UK managing director for Virgin Money.
It comes after the Post Office’s latest consumer credit report revealed that millions of Brits will have to rely on forms of borrowing, such as credit cards, in 2009.
By Jamie Price