Families face more debts piling up as wages fail to keep up with inflation, tax and benefit changes.
A typical family could see their income shrink by £88 a week as the financial changes start to bite, says a study by the Trades Union Congress.
The worry is families already struggling with their finances could have to deal with mounting debt problems without any hope of their income increasing in the short term.
Living standards are set to be hit by between six and 10 per cent, according to TUC analysis , which provides some examples:
• An average income family with two earners living in the East Midlands with two children, will face a financial gap of £2,000 this year that rises to £4,600 by the end of 2013
• An average income single parent living in London with two children will lose 10 per cent of their salary
• A high income family with two earners living in the South East with three children will lose the least six per cent of their pay
TUC General Secretary Brendan Barber said: “People should be angry at the effect that the crash and government policies are having on living standards.
“The wrong people are paying the price for what went wrong over thirty years and the coalition’s naive belief that they can put right the damage in just four years.
“As experts worry about a double-dip recession it is time to change course to invest in jobs, growth and getting the economy moving. This is the only sure way to repair the damage done by the crash.”
One way for families to cope with financial problems is to take a look at current spending that may already show signs of going out of control.
Debt management plans are aimed at families that owe money, but can grasp control of their spending.
Typically, a plan would prioritise debt payments, so high-risk payments like rent or mortgages are paid first, while other borrowings like car loans and credit card are rescheduled over a longer term.