And people in the south east have £2,900 less in their pockets than last year. Households across the region have seen their spending power plummet by 14 per cent in the past 12 months according to figures compiled by utility price comparison firm uSwitch.com.

The fall sees the average household's annual piggy bank shrink from £21,526 in 2007, to just £18,626 in 2008 – slashing the cash available for spending on the high street.

Portsmouth is poorly positioned to cope with a further drop in spending power, according to the report's figures, based on data from the Office of National Statistics.

It ranks the city third bottom in the UK for disposable income, with an average net household income of £27,355 – of which £10,487, or about 38 per cent, is disposable.

This puts the city only £364 ahead of Sunderland, and £627 ahead of the remote islands of Orkney.

With a regional drop of 14 per cent rolled out across the city, disposable income drops to a paltry £9,019.

uSwitch.com said the cause of the squeeze was down to massive jumps in essential household bills, with a 28 rise in petrol prices and gas, a 20 per cent leap in electricity prices, and food and drink bills soaring by up to a quarter.

Maureen Frost, chief executive of the Portsmouth and South East Hampshire Chamber of Commerce, said: 'It doesn't surprise me that there's been a fairly substantial drop in disposable income, but those figures do seem quite high.

'Council tax is also going up more than inflation and we have higher-banded house prices in the south east. But with commercial utilities, most householders are in contracts which are up to a couple of years old. A lot of people are seeing as much as a 100 per cent increase in their bills when they are coming out of those and have to renew them, especially those who are coming out of three year contracts.

'At the moment, talking to retailers, the sector is doing quite well. The higher-end and lower ends and doing well, but the middle is being squeezed, because people are being careful and holding back.'

The report also coincides with a gloomy quarterly survey from the CBI South East, showing plunging profits in the service sector.

It reviewed 176 firms, from hotels to legal services, and revealed thinning bottom lines across a range of businesses, as well as the first dip in service-sector employment for 15 successive quarters, and the steepest drop in business for travel agents in five years.