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Pay packets are up to 11 per cent smaller than in 2008 for millions of workers, a study claims – with under-40s among the worst hit.

The wage squeeze has been felt most in the East Midlands and London, says the report by the Resolution Foundation.

The economic think-tank reckons it will be another three years before pay gets back to where it used to be at the time of the credit crunch – nine years ago.

While typical hourly pay for those aged from 22 to 39 is down 11 per cent, workers in their fifties and sixties have fared less badly.

(Image: PA)

It has dropped five per cent for those in their fifties and just two per cent for those in their sixties. Pay worsened again at the start of the year. Real average weekly earnings fell by 0.4 per cent from January to April.

The research shows part-timers are the only people whose hourly pay is back to where it was before the crash.

Resolution Foundation analyst Stephen Clarke said: “The pay squeeze made an unwelcome return at the start of 2017 and looks set to stay for the rest of the year at least.

“What’s most worrying is that pay packets had still not recovered from the last squeeze when this latest one hit.

“The wages of younger workers are still more than 10 per cent lower than they were back in 2008. This latest squeeze means it will take many more years for their earnings to fully recover.”

(Image: Getty)

The one bright spot is the impact of the National Living Wage , which has ­benefited millions of workers since it was introduced two years ago.

The findings come as UK business leaders warn that much-needed growth in the private sector has slowed in the past three months.

A CBI survey of 762 firms in the ­manufacturing, distribution and service sectors shows growth has risen by six per cent – compared with 13 per cent in the previous three months.

CBI chief economist Rain Newton-Smith said: “Growth has slowed for a second successive month and expectations for the quarter ahead have cooled.

“With the economy shifting down a gear – and higher inflation eating into household incomes – it’s vital the Government creates the right environment for businesses to continue contributing to the country’s prosperity.”