Many firms struggling to adjust National Living Wage rises

The current wage rate of £7.20 an hour for workers over the age of 25 will go up to £7.50 in April, the same month the apprenticeship levy comes into force.

The CBI said many companies were worried about the increased inflationary pressures facing their businesses in the coming months.

In its submission ahead of next month’s Budget, the business group said the Government should prioritise stability because of “heightened economic uncertainty” this year.

Rain Newton-Smith, the CBI’s chief economist, said: “In a more challenging economic environment, the Government must be careful not to put further pressure on firms.

“Top of list for the high street and our manufacturers is for the Government to tackle the UK’s outdated business rates system, as this seriously risks impairing their ability to deliver the jobs and investment in our economy.

“While the economy has proved resilient, inflation is rising and growth is set to slow.

“As uncertainty around the manner of our EU exit dampens investment and higher inflation erodes consumer spending growth, the Government must show that it is serious about supporting companies to invest, to help our regions and nations prosper.”

The CBI added that the Government should use a current review of taxes for innovation, to help smaller firms make the most of the system.

On the education front, the CBI called for dedicated careers leaders to be appointed in every school.

Neil Carberry, the CBI’s director for people and skills policy, added: “We know that improving schools is the best long-term growth strategy a nation can have.

“While in many areas schools have made impressive improvements in recent years, too many regions are left behind and too many young people still don’t get the education they need.