The economic downturn has generated "an extreme unwillingness to spend on homes", with home and garden set to be one of the slowest areas of growth over the next few years.
According to this year's British Lifestyles report from Mintel, squeezed finances mean 56% of Brits, or 23m adults, now only buy items when absolutely needed and 37% are buying fewer treats for themselves and their families.
Today, the top three financial priorities for consumers are keeping up with bills (82%), adding to rainy day savings (67%) and saving for big-ticket purchases (58%). And the desire to invest in home improvements has taken a massive hit from the new frugality.
Mintel asked consumers how they would spend a lottery win of £1,000 and compared the findings to those of 2008 when the same question was posed. Mintel says that five years on consumer attitudes to spending a lottery win have remained much the same - but with the exception of home improvements. Just 11% claimed they would spend their lottery windfall on this compared to 20% in 2008.
It came fourth in the list, which was topped by a holiday (27%), put aside for a rainy day or an emergency (23%), give it to a family friend (12%) and, in fifth place, pay off outstanding bills (11%).
"The decline in likelihood of spending on home improvements reflects an extreme unwillingness to spend on homes," said Ina Mitskavets, senior consumer and lifestyles analyst at Mintel. "The fact that almost a quarter of Brits would put a lottery win aside for a rainy day is perhaps the strongest testament to just how frugal today's Britons have become, and how entrenched their desire for savings is in the current economic climate."
And the future holds no better news for home improvement retailers, according to Mintel. It predicts that consumer spend will grow 17% between 2012 and 2017, the key sector beneficiaries being non-alcoholic drinks, set to increase 25%, in-home food 20% and beauty and personal care 18%.
However, home and garden will be amongst the slowest areas of growth, forecast to put on just 7%. Others will be technology and communications at 5%, foodservice at 7%, holidays at 9% and leisure and entertainment at 11%.