Pay freezes hit three quarters of workforce

The lack of salary increase, combined with a soaring cost of living, has meant that nearly 65 per cent of people surveyed by Equifax said that they were saving less - and of those, almost two thirds said they had cut back on putting money into regular savings accounts.

"Rising living costs and a freeze on earnings for many is forcing consumers to make some difficult decisions," said Neil Munroe, external affairs director at Equifax.

"Our research seems to suggest that consumers are being left with little choice but to make cuts to their regular monthly savings.

"It is easy to see why consumers find it difficult to be motivated to save when rates are so low," he added.

"So it is understandable that people would rather make cuts to their regular savings."

Soaring utility bills, combined with higher food and petrol prices, have hit consumers hard. Wages have failed to keep up with inflation, which stands at 4.2 per cent.

However, while people are slashing the amount they deposit in a savings account every month, the survey results suggested they are planning ahead, possibly in preparation for a interest rate rise.

More than half of the 730 people surveyed said they were paying off more of their credit card balance each month to reduce interest charges, while 65 per cent are shopping around when home and car insurance policies are due for renewal.

Iain McMillan, director of CBI Scotland, said many companies had been forced to freeze wages in an effort to preserve jobs.

"There is a large number of individuals in the private sector and increasingly, in the public sector too, who are not receiving pay rises," he said.

"One person's pay rise, in these economic hard times, can be another person's job loss."

Mr Munroe said that putting money into a savings account is also off-putting to many due to low savings account interest rates which offer very little return on investment.