The Government must overhaul its minimum wage policy following the Brexit vote or risk damaging the economy, one of Britain’s biggest business groups has warned.

The British Chambers of Commerce (BCC) is urging the Government to abandon its “politically driven” approach to setting the national living wage, which could become “unaffordable” as the decision to leave the European Union ushers in a period of uncertainty.

In its submission to the Low Pay Commission’s consultation on future increases, the lobby group says failure to recalibrate the policy could push up prices, raise unemployment and even force companies out of business

Championed by the former chancellor, George Osborne, the minimum wage for people over 25 rose by 7.4pc to £7.20 this April.