Thinktank says rich will prosper but ordinary families will not regain pre-recession earning power for eight years. The study, which focuses on the state of the "squeezed middle" and is produced by the independent Resolution Foundation, looks at the situation of 10 million adults, who crucially do not rely heavily on means-tested support from the state, and their 5.2 million children. Researchers show that if growth remained sluggish for the next eight years the average annual disposable income of people "middle income" , representing a third of the population, would be £20,200 in 2020 – around £1,700 less than in 2007. he real winners would be the top half of the country's earners, whose real disposable income would rise by almost 10% by 2020. Even under the slow growth scenario envisaged by the foundation, the top half of society would see incomes rise by 4%. The report says the squeezed middle has to cope with a prolonged wage squeeze – with real wages falling 4.2% over the last year – and warns that the most significant cuts to tax credits have yet to kick in. It says that the major recipients of tax credits are facing a further loss of income.
The report's author, Matthew Whittaker, said there was a "growing inequality of earnings" at the heart of the long-term squeeze. Gains flowed primarily to higher income households and, more particularly, to those at the very top of the distribution. "If this trend continues once growth returns it may not be just those on low and middle incomes finding themselves left behind in the next decade, but rather the majority of society."