Just under a third of people said they expected the economy to deteriorate further during 2010, up from only 22pc of people who felt this way in the three months to the end of September.

There was also a sharp drop in the number of people who were optimistic that the economic situation would improve, with this falling to 39pc during the final quarter, down from 52pc, according to the Association of British Insurers.

The group said the number of people who were worried about their jobs also increased during the period, with 31pc saying they were now more concerned about their job security than they had been three months ago, up from 27pc in the third quarter.

Consumers' increased pessimism has led to a rise in the number of people who are focusing on paying off credit card and loan debts, with 42pc of people saying they were trying to clear their unsecured debt more quickly, up from 34pc a year earlier.

Among those who are saving regularly, only 17pc expect to be setting aside more during 2010 than they did last year, compared with 24pc who planned to increase their saving levels during the coming year in the third quarter.

Less than one in five people also said they would rather go into debt than go without something.

However, seven out of 10 people admitted they would cope badly if they lost their job, and four out of 10 said they had not made adequate financial provisions that would enable them to cope with a large unexpected expense.