The report by the Institute of Fiscal Studies for the Family and Parenting Institute (FPI) estimates by 2015-16 the average household with children will face an income drop of 4.2 per cent. For a couple with two children this is the equivalent to £1,250 a year.
Such a fall would plunge 500,000 children into absolute poverty, using the 2010 Child Poverty Act definition of 60 per cent of the 2010-2011 median income.
The report, The Impact of Austerity Measures on Households with Children, found the largest families and lone parents will be the hardest hit financially in the coming years.
While those households with no children face a dip in annual income of just 0.9 per cent within three years, those with three children will see income fall by 6.8 per cent.
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