The result was part of the building society's Consumer Confidence Index, which questions 1,000 people on their confidence in the economy and employment.

The current index position is 38, some 17 points lower than the figure for December 2010 and 39 points lower than the long-running average. The fall is bad news as there had been a slight rise in confidence in November.

Robert Gardner, Nationwide’s chief economist, said: “While disappointing, the results are not surprising. Right to the end 2011 was an extremely tough year for UK consumers.”

He said the fall was likely caused by the high costs of living, a high unemployment rate and, especially in December, worries about the Eurozone.

Some 74 per cent of people rated the economic situation as bad, up from 70 per cent in November. Some 70 per cent rated the employment situation as bad, slightly up from 68 per cent in October.

Another negative was the fall in the expectations index which fell by five points, indicating diminishing confidence about what the economy will be like in six months time.

Mr Gardner said: “With UK recovery unlikely to gain much forward momentum in 2012, we are unlikely to see confidence surge in the near-term.

“However, there are some positive developments. As we move into 2012, inflation should continue to fall back, while interest rates are expected to remain at their current all-time low of 0.5 per cent throughout the year. This should help ease the squeeze on household budgets.”