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UK government set to increase minimum wage

The UK government has today confirmed that the minimum wage will be increased on an annual basis and despite calls to freeze this year's rise the government intends to push through with a potential increase to around six pound an hour. So is this the right move, bearing in mind the state of the UK economy?

We have two very distinct parties fighting different causes with businesses adamant that the minimum wage should be frozen for the foreseeable future in order to allow businesses to trade out of the recession and get back on their feet. However, on the other hand the low pay unit and the unions are also adamant that the minimum wage should rise to around six pound an hour, a move which they believe will help not only the low paid but the economy as a whole.

Indeed it is forecast that a 20p increase in the minimum wage would save the Treasury around £200 million year and generate an additional £400 million of extra revenue in the UK business arena. If these figures are correct then it would appear that businesses in the UK will more than cover the extra cost of the minimum wage with additional revenue and hopefully additional profit. However, is it really as straightforward as that?

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