The minimum wage is set to be raised by almost 7% in a move which has sparked concern among employers.
Chancellor Rachel Reeves announced the increase, to come into force from April 2025, on the eve of her first Budget.
Under the previous Conservative government, independent advisors indicated the minimum wage for adults in Britain was on course to rise by 3.9% next year.
But the new announcement of a 6.7% rise means the minimum wage will shoot up from £11.44 to £12.21.
Reuters reports the Low Pay Commission (LPC), an advisory body of employers and trade unions which recommends minimum pay rates, pointed out employers have had to deal with the adult minimum wage rate rising by more than 20% in the space of two years.
Chair Philippa Stroud said: "The data show some signs of employers finding it harder to adapt to minimum wage increases."
The Resolution Foundation think tank, which focuses on living standards, was also reported by Reuters as saying the rise was good news for low-paid workers but that the LPC should watch for unintended consequences, such as employers using more self-employed workers to minimise costs.
Meanwhile the Confederation of British Industry trade body warned the increase would put pressure on company finances and hamper investment spending.
It comes as Reeves is today expected to announce a hike in employers' National Insurance to raise money for public services.
The threshold for when employers start paying the tax is also expected to be lowered.
The Times reports Alexandra Hall-Chen, of the Institute of Directors, has warned the the rises could create "something of a perfect storm" for businesses and will act as a "considerable disincentive for employers to hire new staff".
Meanwhile, The Telegraph reports Reeves is plotting to make the Bank of England treat climate change on an equal footing with growth.
In a letter to Governor Andrew Bailey on Wednesday, The Telegraph says Reeves is expected to call on Threadneedle Street to reinstate climate change as one of the Bank’s key priorities.