The Office for National Statistics confirmed that the "household savings ratio" – a measure of how much of their income people are saving – fell to just 2.1% in the first three months of 2007, half the level of the fourth quarter of 2006 and the lowest reading since 1960.

The new figure raises concerns that many people are running down their savings in the face of higher interest rates and are still spending beyond their means.

The Bank of England has already raised interest rates four times in the last year by a total to the current 5.5%. Consumers have also seen sharp rises in energy costs, council tax and mortgage payments at a time when pay settlements are still below the rate of inflation.