Earnings for UK workers are still lower than they were in 2008, having failed to recover in the 10 years since the financial crisis and millennials are the hardest hit, according to figures from the Institute for Fiscal Studies.

GDP is just 11 per cent higher than it was was at the peak of the crisis, meaning the economy is 16 per cent, or £300bn, smaller than it would have been based on pre-crisis trends.

The “most direct effect of this has been to hit workers’ pay packets”, the IFS said.

Median real earnings are still 3 per cent lower than they were in 2008, and 13 per cent – or £3,500 annually – lower than expected based on growth rates in the run up to the crisis.

People in their thirties are the worst hit in terms of pay, with median earnings 7 per cent lower than in 2008, while pay for those in their twenties is 5 per cent lower. For those aged 60 and above, pay is down 1 per cent compared to 2008.

The latest data from the Office for National Statistics showed wage growth rose more than expected in July, hitting 2.6 per cent, and economists predict growth of around 3 per cent for the year.

The IFS said one positive result of lower pay is period of strong employment growth since 2008, with 2.7 million more people in paid work today compared to 10 years ago – at 75.6 per cent overall, the employment rate is at its highest level ever.

“We should never stop reminding ourselves just what an astonishing decade we have just lived through, and continue to live through,” the IFS said in its report.

“The UK economy has broken record after record, and not generally in a good way: record-low earnings growth ... interest rates ... productivity growth, record public borrowing followed by record cuts in public spending.

“On the upside employment levels are remarkably high and, in spite of how it may feel, the gap between rich and poor has actually narrowed somewhat, but the gap between old and young has grown and grown. With public debt twice its pre-crisis level, economic growth remaining sluggish and the population ageing rapidly there will be no shortage of tough decisions over the coming decade.”