London town housesThe gap between the richest and poorest households in the UK has narrowed since the recession of 2007-08, according to the Institute for Fiscal Studies (IFS).

In its latest report on living standards, the IFS said rising employment and sharp falls in income in the middle and top earning households was behind the decline in inequality.

There had been a “dramatic” fall in inequality in London, the IFS said.

However, the capital is still the most unequal region in the UK.

“While London remains the most unequal part of the country, inequality in the capital has seen a dramatic decline over the last decade,” said Agnes Norris Keiller, a research economist at the IFS.