Most households in Britain have seen their income squeezed by government spending cuts and the economic slowdown in the past year, according to the Bank of England.
The bank's annual household survey, released on Monday, showed that people across the UK are seeing the real effects of "fiscal consolidation" and the country's stagnant economy hitting their finances and job prospects. More than 2.6m people are now out of work, according to Office of National Statistics (ONS) figures released last week.
Around half of respondents believe that they have been directly affected by cuts or tax rises, and many have either sought new employment or taken on longer hours in response to their falling incomes. Most households expect the squeeze to go on, and feel that their income levels are not secure.
12% have experienced difficulty in paying for their accommodation, and 48% reported that they were cutting back on spending to be able to pay their bills.
High energy prices and increased value added tax (VAT) have exacerbated the problems of weak income growth and unemployment, the bank said. On average, households responding to the survey were £46 per month worse off, in terms of available income, than they were in 2010. Public sector workers, or those households with more exposure to the public sector, reported larger falls in available income.
Most households were also finding it harder to get credit than they did in 2010, according to the survey.
The Institute for Fiscal Studies think tank, in its analysis of George Osborne's "mini-budget" announced at his autumn statement, warned that many in the country face a decade without any appreciable rise in living standards.
The pace of the UK's recovery from its 2009 recession slowed in the last quarter, the bank said, in part due to the consequent fall in consumption from the pressure on household finances.
UK retail has had a difficult autumn, with inflation, VAT rises and economic uncertainty hitting even staple purchases. Major supermarket chains, led by Tesco, have embarked on price reduction drives in a bid to revive flagging sales.
An unusually warm October saw clothing purchases dip, and bellwether groups, such as Philip Green's Arcadia, have posted poor results. Earlier in December, Barratt's shoes became the latest casualty on the high street, going into administration for the second time in two years.
Even in the run up to the Christmas period - normally a vital time for shops to drive sales volumes - the signals have been, at best, mixed, with the ONS and the British Retail Consortium (BRC) showing differing levels of pessimism - the former suggesting a nascent rally was beginning, the latter forecasting more pain.
Domestic consumption accounts for around two-thirds of the UK's gross domestic product, so the economy is heavily exposed to slumps in consumer confidence.