A rise in the minimum wage to £5 an hour would hit businesses hard according to the Association of Chartered Certified Accountants (ACCA).
In a survey of 500 ACCA members, representing 10,000 businesses, almost 80 per cent of respondents thought an increase of the National Minimum Wage (NMW) would have a serious effect on the economy and employment.
Thirty-eight per cent of respondents said the existing minimum wage had already made a big impact on employment practices. Employers were more likely to abolish paid breaks, cut working hours and increase workloads to re-coup costs.
ACCA's head of small business, David Harvey, said that if the NMW were raised to £5 per hour as proposed by the TUC, employment and profitability would be seriously damaged.
He commented: "This survey shows that there is a ceiling at which the NMW will become counter productive. It also reveals that a significant number of companies have already been adversely affected even at the lower rate and that the proportion is increasing year on year.
"A higher NMW is not a one-way bet for lower paid workers particularly in regions where the NMW is high in relation to costs and prices in the local economy. At £5 the NMW would close businesses."
By Ben Willmott