British consumers will not lead the country out of its second recession in four years, according to a report by Standard & Poor's.
In their latest UK economic outlook report, the ratings agency stated that, "a number of trends have eroded the buying power of consumers."
Nationwide's consumer confidence index fell to 41 points in May, only four points above its lowest ever reading in October 2011.
Consumer confidence appears to be dampened by continued inflation, rising unemployment and the current Eurozone crisis.
The report goes on to say,
"We believe that in a context of elevated economic uncertainties a fresh rise in the household savings rate is most likely. Households will choose to preserve a certain level of precautionary savings especially as unemployment continues to climb."
Consumer demand is predicted to remain subdued as people focus on reducing their debts rather than spending.
While retail sales grew by 1.4 per cent in May, this was largely due to warm weather and the consumer boost from the Queen's Diamond Jubilee.
PriceWaterhouseCoopers reported that 183 retailers went into administration in 2011, with recent casualties including Game, Peacocks and Clinton Cards.
Written and narrated by Alfred Joyner