Britons face £1,100 hit to living standards under Keir Starmer's workers' rights bill

In total, the think tank estimates the bill could reduce the size of the UK economy by between £38billion and £76billion.

Shanker Singham, who chairs the Growth Commission said: "The evidence is clear from our calculations that the Employment Rights bill will further harm the UK's economic prospects."

The proposed bill aims to strengthen protections for workers by introducing immediate employment rights and improved sick pay from day one.

However, major UK business groups have warned the reforms could cause "significant damage" to the economy, while the Resolution Foundation has also raised concerns about potential harm to the jobs market.

Despite growing criticism, Housing Secretary Steve Reed said on Monday that ministers remain fully committed to delivering the reforms without watering them down.

The legislation represents one of the biggest shake-ups of workplace rules in decades, introducing a wide range of new protections that would apply from the first day of employment.

The Growth Commission, an economic think tank backed by former Prime Minister Liz Truss, warned the plans could reduce workplace flexibility at a time when businesses are already grappling with higher taxes and rising minimum wage costs.

According to the Growth Commission's analysis, the reforms would align Britain's employment regulations more closely with those of Spain, where joblessness exceeds 10 percent.

The organisation has urged immediate action, with Singham declaring: "If the Government is serious about prioritising growth, it should drop the Employment Rights bill from its legislative agenda as a matter of urgency."

These concerns add to growing pressure from various economic analysts questioning the legislation's potential impact on UK competitiveness.

A government representative dismissed the Growth Commission's analysis, stating: "We do not recognise these figures. This bill will benefit the economy by helping businesses to thrive as well as raising living standards across the country, creating opportunities for all."

The Conservative opposition has seized upon the report to attack Labour's employment strategy.

Shadow Business Secretary Andrew Griffith commented: "This report is just another from a series of business groups and think tanks all saying this bill will damage rather than help the economy."

He added: "Whilst all eyes are on the next Budget, more red tape and fewer jobs is the last thing business needs. Every Labour government leaves unemployment higher but this one is going out of its way to ensure that."