All the recent calamities in the world's financial markets have been talked about in the papers ad nauseam.

I think it is fairly safe to say many people are sick to the back teeth of hearing about it, not to mention the confusion financial commentators are causing by their conflicting fiscal forecasts.

One day in one paper, you read there is a boom and the economy has withstood the rigours of recent financial tremors, the next day another paper is warning of an imminent financial apocalypse. I suppose that is the inherent volatile nature of macroeconomics.

Well today, it is the sceptics' turn to strike the fear of God into the nation's hearts with financial scare-mongering. Apparently, all the problems that have hit mortgage lender Northern Rock, the sub-prime mortgage disaster and the resultant instability in the global markets is set to hit Brits hard in the pocket.

If recent financial forecasts are to be believed, there is set to be a dramatic effect on prices in the UK's high streets, from groceries and petrol to luxury goods, new mortgages and credit cards.

Mervyn King, the governor of the Bank of England, has sent out a stark warning to the British public that we should all prepare to economise in the coming months.

The Bank of England's forecasts suggest that next year will be the toughest in a ten years. Economic growth is expected to practically grind to a halt, inflation is anticipated to rise and share prices could tumble.

England's central bank has said that it may probably cut interest rates, which is good news. But this will only have a mere mitigating effect - it won't completely ward off these negative effects. And perhaps worst of all - mortgages may actually rise yet again.

There is a general consensus that there is an economic slowdown on the horizon.

Roger Bootle, of the leading London economic consultancy Capital Economics, said somewhat dismally: "It is a time for worry and concern".

There is a slowdown in the housing market and also a slowdown in spending. And this, some believe, may actually result in a recession or worse, a housing crash.

Even during this year's Christmas period, a time when Western consumerism reaches fever pitch, with consumers stretching their budgets, credit cards and overdrafts to their absolute extremities, spending is not expected to be so high.

Precious few retailers expect the Christmas shopping tills to be anywhere near as active as they usually are during the spending-spree season.

A senior figure in one of the leading high-street chains told the Guardian: "Normally we're optimistic before Christmas. This year? We're very cautious."

Cautious indeed. So much so in fact, that yesterday marked the start of early Christmas sales. Retailers such as Marks & Spencer, Woolworths and Toys 'R' Us slashed their prices in an attempt to encourage spending and moderate the impact of the credit-crunch.

So as Christmas comes, I would advise people to curb their spending and watch their finances with eagle eyes. Because as the New Year approaches, we could all be facing serious price increases which could dent our bank balances for the worst.