Research by Alliance & Leicester has suggested that 36 million people (around 76 per cent of Britons) are preparing to make cut-backs on personal spending.

According to the research, in which over 2000 people were questioned in early May, 73 per cent of Britons had made some kind of financial cut-back and 34 per cent of Britons said they expected their disposable income to drop in the next six months.

Around 79 per cent of respondents said that belt-tightening was the result of rising prices for food, consumer good, household bills and fuel prices.

In order to fight the heightened cost of living, 39 per cent of Britons said they would be cutting back on clothes shopping and on day-to-day living costs, and 36 per cent said they would spend less on socialising.

Over a quarter of respondents (28 per cent) said they had dipped into their personal savings to help cover costs, whilst only seven per cent said they were decreasing their pension or retirement savings.

Emma Walkley, current account manager at Alliance & Leicester, said, It seems many of us are feeling the pinch and looking for ways to cut back. The good news is that people are taking action now and looking at ways of making their money go further rather than burying their heads in the sand.

As a nation we are fairly financially minded which means that when budgets are stretched we can plan pragmatically how to cope.