Almost one in three Britons expect more disposable income this year but barely half that number expect to ease their debt, says a new report indicating that people have an unrealistic attitude to money.

Thirty two per cent of us expect to see an increase in our disposable income over the next 12 months but barely half that (17 per cent) expect to reduce our level of borrowings during the same period says a survey conducted for the Prudential.

Home values were also the subject of wavering confidence. Seventy six per cent felt their home had risen in value over the last 12 months, but only 61 per cent believe that their homes will increase further in value over the next year.

There is further evidence that people are living in a state of financial unreality. In general, people are significantly more confident about the prospects for their personal financial situation over the coming year compared to their experience over the last 12 months. At the same time they have deeper anxieties about the state of the national economy.

Significantly more people (25 per cent) expect their personal economic conditions to improve next year, than those who think the national economy will lift (15 per cent).

By the same token, almost twice the proportion of people who thought their personal finances will deteriorate (20 per cent) thought the national economy will get worse (36 per cent).

Angus Maciver, Director of Research at Prudential, said: "It's positive to see that people expect to have more money in their pockets during the coming year, but the question is, what are they planning to do with it? The obvious answer would be to reduce their level of debt, but the research doesn't reflect this."

"What seems to be missing, at least partially, is a link in people’s minds between their own personal financial security and that of the rest of the nation. It will be interesting to see how the recent interest rate rise will alter people's confidence in relation to their personal wealth. We will have to wait a few months to find out."

Other key findings:

• Only 20% of us expect our personal finances to get worse
• Only 8% are seriously concerned about redundancy
• Some 27% felt their disposable income was a little or a lot higher than last year
• More than one in four expected their savings to increase in the coming year, compared to the 20% who said their savings increased last year
• Only 11% expect their savings to drop this year, compared with the 20% who said their savings dropped last year.