Virgin Money's Financial Outlook Index shows 29% of adults expect their income to fall over the next three months and the next 12 months.
And it revealed an alarming lack of confidence in consumers' ability to pay household bills and fund spending across a range of 16 key measures of financial health.
But while spending is taking a hammering so is confidence in maintaining essentials - one in 10 are not confident they can keep up mortgage and insurance payments and one in five are pessimistic about being able to afford new clothes.
Rob Clifford, UK managing director of Virgin Money said: "The economic outlook may look bleak and consumers are now familiar with harbingers of doom on a daily basis. But there is hope - for every person worrying about paying essential bills, there are nine others confident of doing just that in this country.
"But we cannot trivialise the effects of the economic downturn. With 29% of workers expecting a drop in disposable income over the next three months and next year, it is clear there is a mood of caution throughout the country.
"There is light at the end of the tunnel, however. Not everyone is suffering the same and not all businesses are equal in the recession. Some still have money to spend but they are increasingly careful how they spend it.
"There are signs of recession everywhere but there are also signs for optimism."
