LOCAL workers earning £20,000 a year will be £154 a year worse off when increased National Insurance contributions are introduced next month.

Accountants and business advisers KPMG calculate that this will be the effect of the additional one per cent increase announced by Chancellor Gordon Brown last year to pay for increased public spending.

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But a new survey conducted by YouGov for KPMG found that 61 per cent of Northern employees were unaware that their take-home pay is to be hit.

But despite a recent sharp decline in the level of consumer confidence and with economic growth predicted to run below forecast for 2003, 50 per cent of those surveyed said it would not affect their overall spending in 2003.

Some 59 per cent of respondents across the region said they were not expecting to receive a pay-rise from their employers to cover the loss of salary.

Andrew Smith, Chief Economist at KPMG, said: "A one per cent hit may not sound like huge amount to people but it is likely to contribute to a significant slowdown in consumption growth this year.

"The fact that the majority of the population is unaware of the effect of the change suggests that many have yet to adjust their behaviour.

"The choice consumers will inevitably face is between borrowing to compensate -- which might not prove so attractive as the housing market slows -- or having to curtail their spending plans."