Brexit-bashing think tank warns Chancellor Philip Hammond that hikes to the living wage could trigger unemployment

THE CHANCELLOR was last warned big hikes in the National Living Wage could trigger a surge in unemployment – despite BETTER growth forecasts.

The Brexit-bashing OECD think tank raised its prediction for the UK’s economic growth for 2016 and 2017 on the back of stronger consumer spending.

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But it told Philip Hammond that growth may be just 1 per cent in 2018 – the weakest in the G7 – and further hikes in the Living Wage “should be considered prudently”.

In its latest economic outlook the OECD said: “The effects on employment need to be carefully assessed before any further increases are adopted. Especially as growth slows and labour markets weaken.”

The Chancellor last week announced plans to raise the new minimum wage to £7.50 an hour next April. The Government wants to increase it to £9 an hour in 2020.

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The OECD was forced to rip up projections of a post Referendum recession in September after stronger-than-expected growth over the first six months of 2016.

The Paris-based think tank yesterday once more upped its forecasts for this year – to 2 per cent from 1.8 per cent.

Growth next year should be 1.2 per cent – better than the original forecast of 1 per cent.

It said the Bank of England had helped to “mitigate” the shock of the June 23rd vote by cutting interest rates and printing more money.

But it warned that there was “considerable uncertainty” over the UK’s status after 2019 and warned that investment could fall, inflation was set to rise and unemployment increase.

The OECD added the world was still languishing in a “low growth trap”.