The cost of freedom under austerity is weighing more than ever on prisoners who struggle with financial instability on release and are more likely to re-offend than ever, continuing a vicious circle of crime and punishment just as prisons approach full capacity across Britain and the rest of Europe, charities say.

According to reports from nationwide prison organizations, the majority of ex-offenders struggle to cope with debt, housing costs, unemployment and austerity on release from prison.

They say that the financial factor is borne out by the the rate of recidivism - or relapse into crime- that has reached record highs in 2012 with 90 percent of prisoners having previous convictions, according to the Ministry of Justice.

Chris Bath, Executive Director of Unlock, the National Association of Reformed Offenders, told CNBC that prisoners face "enormous financial barriers" on release from prison, and he warned that the cycle of crime, punishment and re-offending - that costs the British economy 95 billion pounds ($150 billion) a year - is set to continue if the financial hardship faced by prisoners on release is not addressed.

"When you're released from prison you become a social leper...or low-skilled ex-con" he told CNBC.

"If I had a pound for every person I've met who said to me "I thought prison was going to be the hard bit," he told CNBC.

"At least in prison you have a roof over your head and food in your stomach. The moment you walk out of prison you become a social leper, a low-skilled ex-con - you are completely lost and you become nothing."

With 75 percent of employers saying they would reject someone with a conviction, Bath told CNBC that it was extremely hard for ex-offenders to return to the "straight and narrow" and find a job in a society where even the most skilled and experienced workers cannot find employment.

Indeed, with most prisoners reported to be "financially excluded" even before they enter prison and a third having no bank account, according to research by the Civil and Social Justice Survey, the chances of "going straight" and returning to a decent a law-abiding way of life when no-one will employ you is slim, Bath told CNBC.

However, with 230,000 people going through the criminal justice system every year and 9.2 million of Britons of working age having criminal records, according to the Police Crime Database, Bath told CNBC that there is an urgent problem of millions of people exiting the prison system to a "society that doesn't want them back."

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Prisons Under Pressure as Cost of Freedom Rises