Charity says that austerity measures will create a divided continent and 'entrench poverty for a generation'
A free distribution of fruit and vegetables by Greek farmers outside the Agriculture Ministry in Athens. Oxfam has warned on the state of Greece in its predictions for Europe. Photograph: Louisa Gouliamaki/AFP/Getty Images
Europe faces a "lost decade", with the number of people trapped in poverty across the continent set to rise by up to 25 million by 2025 unless austerity policies are reversed, according to a damning new report from aid agency Oxfam.
The charity, which is better known for delivering relief programmes in developing countries, says the damage being inflicted on many European societies is reminiscent of the devastation wrought by the strict "structural adjustment" programmes imposed on poor countries by the International Monetary Fund over the past 25 years.
Countries in Latin America and Asia that turned to the IMF for help in the 1980s and 1990s were often forced to slash public spending and liberalise their markets in exchange for rescue loans.
"These policies were a failure: a medicine that sought to cure the disease by killing the patient. They cannot be allowed to happen again", says the strongly-worded report, to be published on Thursday.
Max Lawson, Oxfam's head of advocacy, said: "We were founded in 1942 because of the famine in Greece; no one would have believed we would be here more than 70 years later, saying, Greece is in a terrible state."
Using research carried out by thinktank the Institute of Fiscal Studies into the likely impact of austerity on poverty levels in the UK, and extrapolating it across all 27 European Union member-states, Oxfam predicts that relative poverty, defined as the number of people living below 80% of median income, could be set to rise by anything from 15 to 25 million people by 2025.
"The European model is under attack from ill-conceived austerity policies sold to the public as the cost of a stable, growing economy, for which all are being asked to pay. Left unchecked, these measures will undermine Europe's social gains, creating divided countries and a divided continent, and entrenching poverty for a generation," says the report.
With the EU's finance ministers due to gather in Vilnius, Lithuania on Friday, Oxfam is calling for them to adopt a radical new agenda of more progressive taxation, to ensure that the wealthy pay their fair share towards the cost of public services; rising investment; and protection from spending cuts for vital public services such as health and education.
The sovereign debt crisis in the eurozone has seen a series of countries, including Greece and Portugal, accept swingeing public spending cuts, mass privatisations and drastic market reforms, as the price of receiving bailouts from the IMF and their European neighbours.
Financial markets have been relatively calm in recent months, but a number of senior European officials, including German finance minister Wolfgang Schäuble, have conceded that Greece is likely to need a new rescue package, worth up to €10bn (£8.5bn).
Negotiations over a third bailout, against the background of a fragile political coalition in Athens, will reignite tensions over whether the package of measures imposed on Europe's peripheral economies have exacerbated their plight. Unemployment is more than 27% in Greece, and 16.5% in Portugal.
Lawson said: "The only people benefiting from austerity are the richest 10% who have seen their share of income rise whilst poorest have seen their share fall. The UK, Greece, Ireland, Italy, Portugal, Spain – countries that are most aggressively pursuing austerity measures - will soon rank amongst the most unequal in the world if their leaders don't change course."