Families in the UK have been left £8,800 ($10,443) poorer due to Britain's low growth and high inequality as the cost of living squeezes household budgets, a new study shows.
New research from the Resolution Foundation suggests the "toxic combination" has had "disastrous consequences for low- and middle-income households".
The analysis, published on Wednesday, said this has left the UK trailing behind the comparable economies of Australia, Canada, France, Germany and the Netherlands.
The Stagnation Nation report, funded by the Nuffield Foundation, notes that Britain is approaching a "decisive decade" of economic change in the 2020s against a backdrop of the aforementioned issues.
High levels of inequality, real wage stagnation and flailing productivity have characterised the evolution of the UK economy, it warned.
Having almost caught up with the economies of France and Germany from the 1990s to the mid-2000s, the UK’s productivity gap with the countries has nearly tripled since 2008 from 6% to 16%.
That is equivalent to an extra £3,700 in lost output per person, the group said.
According to report if the UK, compared to Australia, Canada, France, Germany and the Netherlands, had the average income and inequality levels of these countries, typical household incomes in Britain would be a third higher – equivalent to £8,800 per household – and those of the poorest households 40% greater.
The foundation suggests the low growth has been "visible" in people’s pay packets as incomes fail to keep up with the pace of inflation, and unemployment rises.
Separate figures from the Office for National Statistics in June showed regular pay excluding bonuses plunged by 3.4% in April after inflation, marking the biggest decline since records began in 2001.
"Before the financial crisis, wages grew by an average of 33% a decade. Since then, pay growth has fallen below zero, and eight million young workers have never experienced a period of sustained rising real wages," it said.
"While the top 10% of households in Britain are richer than those in many other European countries, middle-income British households are not: they are 9% poorer than their counterparts in France, while the poorest fifth of households in Britain are now over 20% poorer than their French and German equivalents."
The UK's slow growth over the past 15 years has combined with the high inequality over the past four decades, warning the country is currently not on track to turn this around.
Torsten Bell, CEO of the Resolution Foundation, said: "Britain is a rich country, with huge economic and cultural strengths. But those strengths are not being built on with the recent record of low growth leaving Britain trailing behind its peers. This forms a toxic combination with the UK’s high inequality, leaving low- and middle-income households far poorer than their counterparts in similar countries.
"We must turn this around, but we are not on track to do so. We underestimate the scale of our relative decline and are far from serious about the nature of our economy or the scale of change required to make a difference. This has to change."
Watch: How to save money on a low income