AJ Bell questioned 1,046 people and found the main reason for reduced spending this year was pressure on finances. Some 53% of respondents said they had less disposable income, while a quarter said they had agreed with family and friends to spend less.  

A tenth said they were already in debt, meaning they were less able to splash out over the holiday period. 

Just over half the respondents asked said they planned to spend the same amount of money this year, while 8% expect to spend more. 

For those planning to spend more, two-fifths said they had extra money to spare while a fifth wanted to make up for last year. 

Some 21% said the higher expense was because the prices of goods had gone up and 4% said they were under pressure from family and friends to spend.

The majority of respondents plan to fork out £100-250 on gifts this year, with 28% of respondents saying so. A quarter of people said they would spend between £251 and £500. 

Just over a tenth said they had not budgeted for Christmas. 

Laura Suter, head of personal finance at AJ Bell, said: “Rising prices and a crunch on many people’s income over the past year mean the UK is headed for a leaner Christmas than usual. Two-fifths of people plan to spend less on presents this Christmas than they did last year, with most saying their finances have been hit so they need to tighten the purse strings.

“Spending less coupled with rising prices causing the cost of each gift to go up, means that many people will have significantly fewer presents under their tree this year.  

She added: “It’s clear the effects of the pandemic are still being felt in many households, with cuts to income coupled with rising prices and bills meaning lots of people are feeling worse off than last year.”

“The best way to stop costs spiralling at Christmas is to set a budget and stick to it, whether that’s for presents or for the cost of entertaining.”

Five steps to stop your Christmas costs spiralling: 

1. Set a budget. 
2. Don’t be a last-minute Larry. 
3. Hunt for a bargain. 
4. Agree a spending limit or do secret Santa. 
5. Ask people to bring a dish or a bottle.