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Above inflation minimum wage rise proposed

The Chancellor George Osborne has said he wants to see an above-inflation increase in the national minimum wage (NMW) by 2015.

In an interview with the BBC, Mr Osborne said the NMW for those aged 21 and over would have to increase from the current £6.31 an hour to £7.00 an hour by 2015, in order to restore its value to pre-2008 levels.

Some business leaders have warned of the potential risks to UK's economic recovery and cautioned the Government against arbitrary wage rises. Recommendations for the NMW rates are made each year by the Low Pay Commission, after an analysis of evidence and data about the current labour market and economic climate.

The director-general of the Confederation of British Industry, John Cridland, said an "unaffordable" rise would risk job creation and hit small businesses.

John Longworth, director-general of the British Chambers of Commerce, warned that a rise could "make the UK economy uncompetitive" and said that "adverse effects" would be felt by "SMEs, young people and graduates."