Britain’s economy could receive a £149bn boost from a change to UK business laws that would ensure companies put social, economic and environmental benefits at the heart of their decision-making, according to a report.

With the UK on course for the second lowest growth rate in the G7 group of leading economies in 2023, the study by the thinktank Demos said it was clear that cutting taxes or raising public spending had not been effective at driving economic growth.

The report suggested that empowering boardrooms to look beyond just its shareholders could drive productivity and lead to a £5.3bn pay rise for workers on the lowest incomes – or £44 a week for the average person on the legal minimum wage.

It calls for policymakers to reform the governance of UK businesses by changing the Companies Act and adding a duty for directors to consider the social, economic and environmental impact of their business alongside profitability and returns for shareholders.

Such a measure could drive growth, it said, as businesses that consider all their stakeholders – such as B Corps, social enterprises and co-operatives – outperform their peers with faster growth, higher levels of innovation, more investment, and greater levels of staff engagement.

The idea has some cross-party support and is backed by a coalition of more than 2,000 businesses, including the grocery chain Iceland, Tony’s Chocolonely and the food sharing app Olio, as well as business groups such as the Institute of Directors.

Andrew O’Brien, director of policy and impact at Demos and the report’s author, said: “We tend to think about growth as a matter of cutting taxes or raising public spending. Our research shows that the biggest gamechanger for the UK economy would be to improve the governance and structure of businesses.

“If we get this right we can add hundreds of billions to the UK economy through boosting investment, productivity and pay for working people. A far bigger impact than most other measures that dominate the debate in Westminster.”