A third of consumers said the economy is their biggest fear in the next six months, according to the Nielsen-British Retail Consortium Consumer Confidence Survey.

That is a significant rise from mid-year, when 22 per cent cited the economy as a major concern, and an even bigger jump from the same time last year, when 17 per cent said it was cause for concern.

1,000 consumers were asked about their job prospects, personal finances, spending intentions and major concerns. The survey revealed that slow wage growth, interest rate rises, high petrol prices, increasing food prices and growing uncertainty in the housing market have caused consumer sentiment to weaken since last year.

BRC director-general Kevin Hawkins said: “Retailers are facing a very challenging year. Not only is a severe slowdown in consumer spending likely, but retailers' share of that spend is also set to fall significantly, ratcheting price competition up still further.

“Last week's rate cut was only the first step to reviving consumer confidence. If interest rates do not fall further and disposable incomes continue to weaken, confidence levels and customers' willingness to spend will continue to decline.”