The UK high street is set to face difficult conditions for at least the next decade according to the latest forecast from an econominc thinktank, with consumer spending rising by just 2% a year until 2020.

This rate of growth falls short of the 3.3% seen in the decade prior to the recession, according to the Ernst & Young Item Club, as household budgets are squeezed by rising inflation and people focus on paying off their debts.

Consumer spending will remain below pre-recession peaks until at least 2013, growing just 0.6% this year and 1.3% in 2012.

The report which was released today (16 May) predicts that consumer spending in London will be higher at 1.7% in 2012 compared to the North East and Wales. Spending on clothing and footwear is expected to recover in 2012.

Although disposable incomes are likely to decline this year for the second year in a row, the research group expects growth of 1.4% in 2012.

"The squeeze on household budgets is only going to intensify this year, as the gap between high inflation and subdued wage growth continues to widen and we experience a second consecutive year of declining disposable incomes," said Andrew Goodwin, senior economic advisor to the Ernst & Young Item Club.

"It will be 2013 before consumers are really able to start enjoying the recovery."

However, possible interest rate rises, lack of credit, and a further decline in confidence could result in shoppers becoming even more cautious in their spending.

"The squeeze on consumer spending is going to accelerate some of the societal shifts we've started to see over the last few years," added Steve Wilkinson, head of consumer products at Ernst & Young.

"Shoppers are going to be a lot savvier about when, where and how they shop. They are becoming more price aware and so we'll be increasingly using comparison websites to find the best deals.

"They'll also be shopping more often, but spending less on each visit, and will be scouring the shelves for special offers and promotional items."