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‘Prices surging’ and ’pay packets stagnating’ as £1,200 spike in taxes predicted

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The Resolution Foundation published new research on Wednesday, stating families are set to face a typical income hit of around £1,200 a year starting from April, causing the chief executive to issue words of concern. The think tank has dubbed the new year as the “year of the squeeze”, as it revealed its findings.

Torsten Bell, Resolution Foundation chief executive, said the peak of the household budget squeeze will be in April.

He said: “The overall picture is likely to be one of prices surging and pay packets stagnating.

“The peak of the squeeze will be in April, as families face a £1,200 income hit from soaring energy bills and tax rises.”

Resolution Foundadtion’s latest quarterly Labour Market Outlook also found, despite the rising taxes and bills, wages are set to be no higher next Christmas.

READ MORE: You have one month to avoid this £100 tax penalty

It notes, while the heavily mutated Omicron variant may be at the forefront of people’s minds at present, it is unlikely to be the defining economic feature of next year as the infection wave is expected to be relatively short-lived.

Instead, it continued, 2022 will be dubbed as the “year of the squeeze” for family budgets, with inflation set to peak at six percent in spring next year, which is its highest level since 1992.  

The report revealed the cap on energy bills is expected to rise by around £500 a year.

It also stated the rise in energy bills will be coupled with a further £100 rise to recoup the costs associated with energy firm failures.

The think tank estimated a typical energy bill could rise by around £600 a year.

Wholesale energy prices have reached new highs due to a plethora of reasons including greater demand caused by cold weather, low gas exports from Russia and nuclear power plant shutdowns in France.

The industry has criticised ministers over the lack of action.

Stephen Fitzpatrick, the founder of Ovo Energy, said this week there had been “a shocking lack of urgency”.

The Government said: “We know people are facing pressure, which is why we’re taking £4.2 billion of action.”

 



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