Low income households are set to be the hardest hit by austerity measures to be implemented in this month's spending review, top public finance experts have calculated.

The Institute for Fiscal Studies today reports that more prosperous households felt the initial impact of the recession which began in 2008, while the benefits system at first served to protect many poorer families.

However, reductions in household income for people who rely on state benefits, which have already been set in motion, will continue up to and beyond 2015/16, the IFS has estimated.

Chancellor George Osborne, who will present the Coalition's spending review for this single year on 26 June, must deliver additional £11.5bn spending cutbacks to meet the government's deficit reduction targets.

Report author and senior research economist at the IFS, Robert Joyce, said middle and higher-income groups have already experienced the full impact of the recession on their incomes, if macroeconomic forecasts by the Office for Budget Responsibility were correct.

‘But much of the pain for lower-income groups is occurring now or is still to come, because these groups are the most affected by the ongoing cuts to benefits and tax credits.

‘Overall, we expect the period of recession followed by austerity to leave income inequality in 2015–16 about the same, or slightly lower, than in 2007–08.'