Sales growth will stall this Christmas, according to research from Mintel.
Mintel says that retail sales with have 0% growth this Christmas compared with an average 5% growth in Christmas spending every year for the last seven years.
Around 40% of UK shoppers surveyed said said they would spend less than Christmas last year, double the number of people who said they would cut spending the previous year.
Twenty percent of people said they will still splash out, compared to 32% last year.
Mintel director of retail and financial research Richard Perks said: "There is always a lot of emotional pressure to spend money and spoil everyone over the festive season, and during the years of unprecedented boom time, many Brits enjoyed lavish Christmases.
"But this year, as budgets tighten, Christmas will become a much less indulgent affair."
He also predicted more discounting on the high street.
"The slowdown in retail sales is taking a long time to develop but is now starting to take hold. As a result many retailers will be looking for ways to encourage people to part with their cash and so we are likely to see discounting and end of year sales start before Christmas," said Perks.
However Mintel added that the younger end of the fashion market including Topshop, Primark and H&M was still buoyant, with younger shoppers less concerned about Christmas spending budgets.