Britain should slow the rate at which it increases its minimum wage to avoid the risk of low-paid workers being priced out of a job during the next recession, an anti-poverty think tank said.

The Resolution Foundation welcomed the rapid minimum wage increases that Britain's Conservative government had ordered since 2015, but said further rises should be done more cautiously.

Britain's unemployment rate has fallen to its lowest since 1975 at 3.8% and employment is at a record high, despite the minimum wage rising by more than a quarter since 2015 to stand at 8.21 pounds an hour for those aged 25 and over. However, the Resolution Foundation warned that it was dangerous to assume these economic good times would last.

"The minimum wage is at a crossroads," it said. "Policymakers seeking to combine ambition with caution might wish to aim for a still fast - but slightly slower rate - of increase than recently seen."

The Resolution Foundation said a minimum wage of about 10 pounds an hour would be needed to eliminate 'low pay', using a common definition of earnings that are less than two thirds of the median hourly wage. "Such an ambitious move would transform the labour market," Resolution Foundation analyst Nye Cominetti said.