Some 61% of people fear the UK will enter into a recession and are bracing for hardship, according to new research by Quilter.
This follows recent GDP data from the Office of National Statistics suggesting the UK is nearing a recession, falling by 0.1%, with the third quarter of 2023 while second quarter growth was revised to a near standstill.
With the cost-of-living crisis, soaring rents, and lingering high inflation, Quilter's research found that 32% of Brits feel that a recession would devastate their daily expenses.
However, despite this negative consumer sentiment, inflation's downward trend and anticipated interest rate cuts could ease the pressure.
Sue Loveridge, financial planner at Quilter, said: "Though the prospect of a recession is daunting, it is not a done deal and for now there is still a chance that the UK avoids one. Inflation is heading in the right direction and interest rates are widely expected to start to fall this year.
"We are already seeing mortgage rates fall which should ease the pressure on household finances, and we can expect this to continue should the Bank of England opt to reduce rates later in the year."
The latest unemployment figures today have experts mixed on whether the Bank will hold off on interest rate cuts or not, but they are still widely expected to take place in 2024.
Turning to savers, Loveridge warned against the comfort of cash. Although rising rates have improved the yields on offer, making it more attractive to low-risk savers, cuts to central bank interest rates can act as immediate stimulants to financial markets and will bring the savings rate down over time.
"If you are sat in cash, you risk missing out on the best days which could cost you considerably in the long run,” she said.
Loveridge also emphasises the support available through services such as Citizens Advice and Step Change for those struggling financially, or who need debt advice.
"Seeking professional financial advice can also be highly beneficial as a financial planner will help ensure you are making the right decisions based on your personal circumstances,” she concluded.