A DRASTIC hike to the national minimum wage could be “catastrophic” for small businesses, warns the head of Business West in Swindon.

Chancellor Philip Hammond has hinted he is considering raising the minimum wage to £9.61, up from £8.21 for over 25s, to end endemic low pay and in-work poverty.

He is also due to meet trade union officials this week and the government has commissioned a review of the latest international evidence on the impact of minimum wages and will announce the independent Low Pay Commission’s findings at the end of this year.

But while Ian Larrard, director of the Swindon and Wiltshire initiative at Business West, saw some benefits in terms of social mobility he warned it could spell disaster for retailers and small and medium-sized enterprises.

He told the Adver: "We know from our quarterly local business survey that a number of businesses in the region are struggling at the moment with a variety of economic headwinds, meaning that the added burden of a minimum wage increase would be catastrophic for SMEs.

“What’s more it could potentially have an adverse effect on the health of our high streets.

“The retail sector, which has one of highest proportions of low paid workers, is already under immense pressure from online competitors and an increase in business rates.

“I fear this move would be the straw that breaks the camel’s back and trigger a series of fresh high-street casualities on top of those we have already suffered.”

He added: “It is a laudable ambition of the chancellor’s to raise the minimum wage to the highest level globally.

“Such a measure would be a positive step toward improving social mobility and reducing income inequality across the UK.

“However, against the backdrop of Brexit uncertainty and a flagging economy this is arguably not the ideal moment in which to do it.”

The hike to £9.61 would mean Britain had the highest national minimum wages in the world.

It is currently 10th in the world, according to the Organisation for Economic Co-operation and Development, and the fourth highest in the EU.