Average incomes 'return to pre-recession levels'

Average household incomes have returned to pre-recession levels, according to the Institute for Fiscal Studies (IFS).

However, the recovery in living standards has been far slower than the period following previous recessions, the IFS suggests.

The study also found that changes to spending patterns suggested people think their earnings have taken a permanent hit - with young people, those on higher incomes and people without children coming out worse in recent years on average.

According to the projections, median household incomes in 2014/15 will have matched 2007 levels, but will be 2% below their 2009/10 peak.

Robert Joyce, another author of the report, said:

Chancellor George Osborne said the report "lays to rest a number of myths."

"It shows incomes have recovered in our country, that the rich have been hit hardest when we've been dealing with our economic problems, and that inequality in our country has fallen," Osborne said.

"But I'm the first to say there's more to do," he added.

However shadow financial secretary to the Treasury Cathy Jamieson said the report "confirms that working people are worse off since 2010."

"This is set to be the first time since the 1920s that people are worse off at the end of a parliament than at the start," she said.