British households are facing “the year of the squeeze” in 2022 as soaring energy bills, rising taxes and high inflation eat into incomes, according to a think tank.
Real wages will effectively stagnate next year, rising just 0.1 per cent, with families set to be £1,200-a-year worse off from April when a price cap on energy bills is raised and a tax increase comes into effect, according to the London-based Resolution Foundation.
This leaves millions of families facing a “cost-of-living catastrophe” next year, the think tank warned.
“2022 will begin with Omicron at the forefront of everyone’s minds,” said Torsten Bell, Resolution’s chief executive. “But while the economic impact of this new wave is uncertain, it should at least be short-lived. Instead, 2022 will be the ‘year of the squeeze’.”
UK inflation has already risen past the 5 per cent mark, hitting 5.1 per cent in November – the highest level since September 2011 – with expectations of 6 per cent next year – the highest rate in three decades.
This will hit consumers who are already grappling with the fallout from the coronavirus pandemic as well as higher fuel bills at the petrol pump and a shortage of goods at supermarkets amid the supply chain crisis.
Households have also faced rising energy bills, as wholesale gas prices soared in recent months, hitting a new record last week of £4.50 per therm.
In April, the higher energy bills price cap is set to be increased, which the Resolution Foundation said will add an additional £500 to spending.
Failing energy firms could then see a further £100 added to energy bills, while a 1.25 per cent rise in National Insurance contributions will cost the average household £600 a year, taking the total hit to incomes to £1,200.
The energy price rise will disproportionately affect low-income families who spend more of their income on energy, accounting for 12 per cent of the income of the poorest households compared with 8.5 per cent now.
Meanwhile, higher earning families will be hit harder by April's National Insurance rise, which would lift tax bills by an average of £750 a year.
By the end of 2024, real wages would still be £740 a year lower than if the UK's "already sluggish" pre-pandemic pay growth continued.
"The overall picture is likely to be one of prices surging and pay packets stagnating," Mr Bell said.
"In fact, real wages have already started falling, and are set to go into next Christmas barely higher than they are now. The peak of the squeeze will be in April, as families face a £1,200 income hit from soaring energy bills and tax rises."
To offset this cost-of-living crisis, the Foundation said the government must act to reduce energy costs with options to reduce the increase in the energy cap including compensating suppliers for the difference, and extending the time period to recoup the cost of the company collapses this year.
“On current trends, this time next year we’re likely to look back on a 2022 defined more by a cost of living crunch than the Omicron wave that will dominate its start,” the Resolution Foundation said.
The biog
Age: 23
Occupation: Founder of the Studio, formerly an analyst at Cleveland Clinic Abu Dhabi
Education: Bachelor of science in industrial engineering
Favourite hobby: playing the piano
Favourite quote: "There is a key to every door and a dawn to every dark night"
Family: Married and with a daughter
Killing of Qassem Suleimani
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Killing of Qassem Suleimani
The specs
Engine: 3.9-litre twin-turbo V8
Power: 640hp
Torque: 760nm
On sale: 2026
Price: Not announced yet
MATCH INFO
New Zealand 176-8 (20 ovs)
England 155 (19.5 ovs)
New Zealand win by 21 runs
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
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The Rub of Time: Bellow, Nabokov, Hitchens, Travolta, Trump and Other Pieces 1986-2016
Martin Amis,
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Qualified teams
1. Netherlands
2. PNG
3. Ireland
4. Namibia
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6. Oman
T20 World Cup 2020, Australia
Group A: Sri Lanka, PNG, Ireland, Oman
Group B: Bangladesh, Netherlands, Namibia, Scotland
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Champions League quarter-final, first leg
Tottenham Hotspur v Manchester City, Tuesday, 11pm (UAE)
Matches can be watched on BeIN Sports
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
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- Source: Can be carried from distant regions
Other must-tries
Tomato and walnut salad
A lesson in simple, seasonal eating. Wedges of tomato, chunks of cucumber, thinly sliced red onion, coriander or parsley leaves, and perhaps some fresh dill are drizzled with a crushed walnut and garlic dressing. Do consider yourself warned: if you eat this salad in Georgia during the summer months, the tomatoes will be so ripe and flavourful that every tomato you eat from that day forth will taste lacklustre in comparison.
Badrijani nigvzit
A delicious vegetarian snack or starter. It consists of thinly sliced, fried then cooled aubergine smothered with a thick and creamy walnut sauce and folded or rolled. Take note, even though it seems like you should be able to pick these morsels up with your hands, they’re not as durable as they look. A knife and fork is the way to go.
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This healthy little dish (a nice antidote to the khachapuri) is usually made with steamed then chopped cabbage, spinach, beetroot or green beans, combined with walnuts, garlic and herbs to make a vegetable pâté or paste. The mix is then often formed into rounds, chilled in the fridge and topped with pomegranate seeds before being served.
MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
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UAE currency: the story behind the money in your pockets
More coverage from the Future Forum
If you go:
The flights: Etihad, Emirates, British Airways and Virgin all fly from the UAE to London from Dh2,700 return, including taxes
The tours: The Tour for Muggles usually runs several times a day, lasts about two-and-a-half hours and costs £14 (Dh67)
Harry Potter and the Cursed Child is on now at the Palace Theatre. Tickets need booking significantly in advance
Entrance to the Harry Potter exhibition at the House of MinaLima is free
The hotel: The grand, 1909-built Strand Palace Hotel is in a handy location near the Theatre District and several of the key Harry Potter filming and inspiration sites. The family rooms are spacious, with sofa beds that can accommodate children, and wooden shutters that keep out the light at night. Rooms cost from £170 (Dh808).
UAE currency: the story behind the money in your pockets
