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Income inequality set to increase, IFS warns

Income inequality will return to near the levels seen before the recession as welfare cuts bite, a respected economic think tank has said.

The difference between rich and poor will be more visible with benefits cuts Credit: Lynne Cameron/PA Wire

The gap between rich and poor had narrowed as middle and high earners faced a wage squeeze between 2009 and 2012, the Institute for Fiscal Studies (IFS) said.

But inequality will almost reach its pre-recession levels by 2015/16 as poorer parts of society feel the effects of cuts to benefits and tax credits, according to the IFS.

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