Austerity could create 25mn more poor Europeans

"These policies were a failure: a medicine that sought to cure the disease by killing the patient. They cannot be allowed to happen again. Oxfam calls on the governments of Europe to turn away from austerity measures and instead choose a path of inclusive growth that delivers better outcomes for people, communities, and the environment."

Greece, Ireland, Italy, Portugal, Spain and the UK – countries that have pursued budget cuts most aggressively - are soon reaching the rank of most unequal countries in the world.

"The gap between rich and poor in the UK and Spain could become the same as in South Sudan or Paraguay,” said Natalia Alonso, head of Oxfam's EU office.

As an example, mortgage laws in Spain see banks evict 115 families from their homes every working day.

Meanwhile, almost one in ten working households in Europe now live in poverty and the trend is worsening, the report notes. Child poverty is also rising and workers who do get paid often do not have enough to support their families.

In the UK and Portugal, real wages have fallen by 3.2 percent over 2010-2012. The real value of wages in the UK is now at 2003 levels.

Italy, Spain, and Ireland all recorded decreases in real wages over this period. Greece has recorded a fall in real wages of over 10 percent.

The projection of up to 25 million more poor people by 2025 was based on data from the past years. In 2011, there were 121 million people at risk of poverty in the EU representing 24.3 percent of the population.

If the EU were to see a three percent increase over the next twelve years to 2025, this would bring the number of people at risk of poverty to 14.9 million. If poverty rates were to increase by five percentage points across the EU this would represent an increase of 24.9 million, Oxfam projects.

Joseph Stiglitz, a Nobel prize winner in economics, also warned about the risks of prolonged austerity.

"Austerity has only crippled Europe's growth, with improvements in fiscal positions that are always disappointing. Worse, it is contributing to inequality that will make economic weakness longer-lived, and needlessly contributes to the suffering of the jobless and the poor for many years," he said, reacting to the release of the Oxfam study.