A big hike in the national minimum wage will hit "vulnerable" companies, the CBI has warned.

Bosses announced on Monday they are backing a "modest" increase of seven per cent, taking the minimum rate to £4.50 an hour and warned they will challenge union calls to boost the highest rate to £5.30 per hour.

Forum Response: GMB

John Edmonds, general secretary of the GMB, told ePolitix.com: "A rise to £5 per hour in the minimum wage will ensure that in many parts of the country, those on lower wages can earn a living wage."

Forum Response: Institute of Directors

A spokesman for the IoD told ePolitix.com: "As we have said numerous times before the more you raise costs, the more you discourage business from taking people on. So far the effect of the minimum wage has been disguised, but if there is a downturn in the economy it will have a big impact."