The first port of call in protecting finances against a looming recession is to set out a simple budget plan by looking at monthly income and outgoings, according to Skipton.

In new advice, the firm insisted that it is not too late to bolster household finance against the incoming financial storm. The group insisted that in setting out a budget, people will find they are in a much better position to reduce outgoings because it will be easier to identify areas where cutbacks can be made. In doing so, consumers may identify deficits that they did not know they had, Skipton noted.

Another prudent course of action was making a move from uncompetitive gas and electricity suppliers in order to limit the impact of soaring utility costs. In addition, reviewing all contracts that consumers are not tied into - such as mobile phones, broadband and landlines - should also be put under consideration. Moving to a cheaper tariff may reduce monthly outgoings significantly.

While monthly obligations such as personal loans and mortgage payments need to be met, the group urged people to consider cancelling all non-essential regular payments. Such areas of expenditure could include gym memberships or magazine subscriptions. It suggested that adopting a pay-as-you-go approach to such products and services could also help to peg down expenditure.

Savings vehicles were also said to be essential, with cash in short-term savings vehicles needing to offer high returns to combat increasing inflation. Online current accounts often provide rates of between six and seven per cent, the company noted.

Furthermore, the company advised: “Check any outstanding credit card or loan debts. If you are not paying zero per cent, it is likely they are costing you more each month than you are receiving in interest on your savings. [If this is the case] then you should pay them off immediately, rather than leave surplus cash sat in an account. Either that or transfer your credit card debts to a zero per cent deal.”

It also recommended conducting a review of insurance policies to make sure households were properly protected against gloomy financial scenarios. Taking out a mortgage payment protection policy was said to provide peace of mind for many consumers but particularly for younger families worried about their ability to weather the economic storm. It also advised this group to make sure their life insurance policy provided necessary protection.

For those considering cutting back on pensions contributions in order to keep finances stable, the group warned that doing so could hurt consumers financially in the future. As such, pursuing such a course of action was recommended only in extreme circumstances.

People who have found that problems meeting financial commitments and obligations such as pensions and mortgage repayments have become more pronounced in recent months may find that taking out a low rate loan proves an effective way to meet essential areas of expenditure and get finances back on track. Doing so may be of particular interest to the 14 per cent of people identified in a recent Scottish Widows survey who were found to be saving between zero and six per cent of their monthly income.

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