Ethnically Bangladeshi and Pakistani households in the UK have experienced the fastest income growth this century after an improvement in their pay and employment rates.

An analysis of household incomes by the Resolution Foundation think-tank shows the gaps between different ethnicities have narrowed since the turn of the millennium.

The catch-up growth by Bangladeshi and Pakistani households has been particularly strong: the median Bangladeshi household experienced real terms income growth of 38 per cent between 2001-03 and 2014-16, compared with 13 per cent for white British households. Pakistani households saw growth of 28 per cent.

But the overall disparities remain large. Median Bangladeshi household incomes are still 35 per cent lower than the median white British household. For Pakistani households the gap is 34 per cent while for Black African households it is 22 per cent.

Adam Corlett, senior economic analyst at the Resolution Foundation, said it was important to recognise that income gaps between different minority ethnic groups and white British households were “significant and persistent”.

“However, we should be encouraged by the fact that there have been big improvements in some instances, such as the impressive employment gains seen among black, Bangladeshi and Pakistani men and women,” he said.

Many non-white groups are disadvantaged in the UK labour market — a problem that both Theresa May and her predecessor David Cameron have highlighted in recent years. Yet some of the disparities in terms of employment and wages have been shrinking.

Employment rates for Pakistani and Bangladeshi women have surged by 10 and 18 percentage points, respectively, between 2001-03 and 2015-17. They still remain low compared with white women at 37, 35 and 72 per cent, respectively.

Employment rates for Pakistani, Bangladeshi and black men have also increased over that period, while the rate for white men has stayed flat.

Pay has made a difference too. Typical weekly pay for male Pakistani and Bangladeshi employees rose 28 per cent over the period after accounting for inflation. For men of other ethnicities, pay grew just 1 per cent.

Family size appears to be another factor that has affected household incomes. The average number of children in Bangladeshi and Pakistani households (including those with no children) dropped from 2.1 in the mid-1990s to 1.3 in the middle of this decade.

The Resolution Foundation warned that the government’s implementation of £14bn worth of welfare spending cuts could hurt the prospects for these groups.

“Given that the impact on low to middle income families is set to be very negative, and that some minority ethnicities are disproportionately low income, young and with children, there is a danger of recent progress being undone,” the think-tank said.

Copyright The Financial Times Limited . All rights reserved. Please don't copy articles from FT.com and redistribute by email or post to the web.