Employers have raised concerns that paying more in National Insurance, along with minimum wages rising and business rates relief being reduced, could hit pay rises going forward and also affect investment.

Yael Selfin, chief economist at KPMG UK, said the latest employment figures indicated that hiring intentions had “weakened significantly”.

She said the hospitality and retail sectors were expected to be “disproportionately affected” by the incoming cost hikes due to them employing a higher proportion of lower-wage workers.

“There is a limit to how much additional cost business can absorb without employment and investment opportunities being damaged,” added Jane Gratton, deputy director Public Policy at the British Chambers of Commerce said.

“The government must do all it can to minimise costs for business and ensure they have access to a skilled and healthy workforce.”

The government has repeatedly said its Budget measures will deliver stability businesses need to invest and grow.

Without taking account of inflation, the ONS said annual pay growth, excluding bonuses, was 5.9% from October to December. Earnings growth for the private sector was 6.2%, while for the public sector it was 4.7%.