Domestic policies, rather than globalisation, are to blame for the stagnating incomes of Britain’s middles classes, a new report claims.

The Resolution Foundation said welfare cuts and housing costs were largely to blame for the dwindling fortunes of the lower middle classes during certain periods in the two decades before the 2008 financial crisis.

The thinktank said too much weight has been given to the idea that an acceleration of global trade between 1988 and 2008 and the swelling middle classes in China dented the fortunes of lower middle income households in richer countries.

At a time when Brexit and the rise of US presidential candidate Donald Trump in the US are shining a renewed light on international trade ties, Resolution conceded there were “winners and losers” from globalisation.

But Torsten Bell, director at the thinktank, said the idea that globalisation was to blame “for all ills” was to let domestic policymakers “off the hook”.

Resolution said: “Domestic policy is central to determining working people’s living standards even in a globalised world. Changes to trade policy, even where desirable, are not a substitute for progressive taxes and benefits, fair wage policies and sufficient housebuilding.”

In an analysis of the 20 years to 2008, it found that stagnating or declining incomes in the UK could often be explained by “identifiable factors such as rising housing costs, welfare policy and economic shocks – suggesting that global forces are only one part of the story”.

The thinktank claims that the so-called “elephant curve”, which suggests very strong income growth for the global middle class in emerging markets such as China, and near-stagnation for the lower middle classes in rich countries, is misleading.

Its own analysis found that while living standards in Britain have faced an “unprecedented squeeze” since the early 2000s, incomes for the global lower middle classes grew between 1988 and 2008, albeit at a slower rate than for other groups, including the wealthiest.

“Gains have indeed flowed disproportionately to the richest within many countries, including in the UK.”

Resolution said that the intensification of international trade and competition has had an “undeniable” effect on many UK firms, with those in the manufacturing sector and steel industry still feeling the pressure.

In a gloomy assessment, Resolution said that the pre-EU referendum view that incomes will fall for poorer UK households in the coming years, while richer ones will experience low but meaningful growth “may now be too optimistic”.

“Following the referendum vote, higher inflation, higher unemployment and lower income growth have been forecast by other bodies, which will also make worse the freeze in working-age benefit levels.

“However, there may also be lower housing costs than expected – especially for mortgagors – and the roll-out of the less generous universal credit has been delayed.”

Using a pre-referendum forecast, Resolution predicted an 18-year period from 2002-03 to 2020-21 of near stagnation or declining incomes for roughly the bottom 40% of the working-age population in Britain.