Departmental budgets could fall by 16 per cent if future Labour or Tory governments want to protect spending on health, education, defence and overseas aid, an economic think-tank predicted today.

An Institute for Fiscal Studies (IFS) investigation said the next government would have to cut spending on the "majority" of public services from 2011-14 to provide real-term rises for health, schools, defence and international development budgets.

Balancing the nation's books will be a key feature of the next general election campaign as both main parties attempt to reduce public debt.

IFS deputy director Carl Emmerson told the Guardian: "It could be eight years of pain... Unfortunately that is the kind of choice we are looking at.

"It will be very difficult for public services. Under the Labour spending plans at the moment it is the tightest three-year period since 1977 when the IMF was involved in setting spending plans in the UK."

Institute for Government director Sir Michael Bichard said the fact that an election was looming meant the debate on spending was “pretty undeveloped”.

“There aren’t many politicians who want to be seen with an axe in their hand in the year before an election,” Bichard told the paper.

Labour former chancellor Lord Healey, who was in Number 11 when the UK was forced to go to the IMF, warned the cuts would be "very painful".

He told the newspaper: "It is always painful to many people, depending on what area you cut. It will be very painful for those who get the money at the moment."

Clashes over public spending have been at the forefront of politics in recent weeks.

The row began when shadow health secretary Andrew Lansley suggested the Tories would make cuts of 10 per cent in departmental budgets in order to safeguard spending rises on health, schools and international development.

But in angry exchanges at prime minister's questions earlier this month, Conservative leader David Cameron said the government's own figures meant Labour would have to cut spending by 13.5 per cent if it wanted to ring-fence health and education.

Prime minister Gordon Brown admitted last week that the government faced "tough choices" over spending, but denied plans were being made for deep cuts of up to 20 per cent.