Consumer confidence is at an all time low because of rising costs and falling property values, according to research by Nielsen and the British Retail Consortium.
The Nielsen/BRC Consumer Confidence index, which polls 1,000 consumers about their thoughts and feelings on job prospects, personal finances and spending intentions, now stands at a score of 79. This compares with a rating of 91 this time last year - then the lowest score the survey had recorded since it began in 2003.
Some 55% of those surveyed ranked inflation as their main concern during periods of economic downturn while 39% of respondents said their main concern was high interest rates. Consumers have been hit hard by both factors in recent months.
In addition, some 60% of the people polled said they felt their job prospects were "not so good" or "bad" compared with 50% of people polled last year.
Some 57% of people felt their personal finances will be "not so good" or "bad" over the coming 12 months compared with 46% of people polled six months ago.
BRC director general Stephen Robertson said: "With one in five people saying they have no spare cash, the highest ever recorded by this survey, customers are telling us they are cutting back on spending on all sorts of non-essentials. Clothes, footwear, furtniture and new technology are the biggest casualties as consumers attempt to manage their money."
"It's clear we are seeing the effects of customers' concerns about the future and about their own levels of debt, " the BRC's Robertson added.
Just 24% of consumers said they would use any spare cash they had after bills to buy new clothes against 29% in October 2007.