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UK households face a hit of £1,200 next year as stalling wages and rising tax and energy bills cause a “cost of living catastrophe” in the spring, a leading thinktank has warned.

Government measures, including the new social care levy on national insurance and the freezing of the personal income tax allowance, will combine with high inflation to make 2022 the “year of the squeeze”, the Resolution Foundation said.

It warned that in April the introduction of tax changes, with a new price cap on energy bills, will cost families £1,200 overnight.

“The months ahead will not be easy for households who see their wages fall back as energy bills and taxes rise,” the report said.

“As Omicron hopefully fades in the early months of 2022, we will come to realise the scale of the challenge posed to household finances.”


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