Modelling suggests inflation could soar to 5.8 per cent, potentially costing the Treasury up to £8bn annually through higher debt interest payments and reduced tax revenues.
The IPPR recommends a series of measures, including a temporary £2,000 energy price cap, a 10p cut in fuel duty, and lower speed limits to curb energy demand.
They also propose targeted, progressive taxes, such as a strengthened windfall tax on energy profits, to offset the costs of these interventions.
The Treasury responded by stating its priority is de-escalation and highlighted existing measures like the extended fuel duty cut and the falling energy price cap.
