LOW and middle-income households are more vulnerable to the next economic downturn as a result of the last financial crisis, a new study suggests.

A decade of weak income growth has left lower-income families in a more vulnerable position since the last recession, says the Resolution Foundation in a report published today.

The think tank previously warned that the risk of recession is at its highest level since 2007.

The report claims that, before the financial crash a decade ago, the received wisdom was that the poor bore the brunt of recessions.

But it says that the “pain” of the 2008 recession, through rising employment and falling pay, was more evenly distributed to middle-income households than in previous recessions.

Its research found that average real earnings fell by £32 a week between 2008 and 2014.

The report states that nearly 60 per cent of low and middle-income families now have no savings put aside, up by a quarter since the financial crisis, making them more vulnerable at the next economic downturn.

Resolution Foundation research director James Smith said: “Britain is facing the highest risk of recession risk since 2007, and we know from previous downturns that it is lower-income households that bear the brunt of economic downturns when it comes to their living standards.

“The deep income squeeze that followed the last financial crisis may have been more equally shared than previous recessions.

“But its depth and length has had a disproportionate impact on the resilience of lower-income households, who now have less scope to reduce non-essential spending or draw down on savings to weather a further recession than they did after the 2008 crisis.”