A former Bank of England chief economist has called for interest rates to be put on hold to avoid tipping the economy into recession.

Andy Haldane, a senior adviser to Chancellor Jeremy Hunt, said the recovery was “still on pretty unsteady legs” and the Bank could “take a bit more time” to bring inflation down.

The Bank raised interest rates for 12 consecutive months and by a quarter point last week, taking the rate to 4.5%.

Mr Haldane told the New Statesman: “What I’d be doing in this situation is probably pressing the pause button.

“There’s a lot of tightening in the pipeline already, most of which we haven’t yet seen the full effects of, as it hits people’s mortgage payments later in the year. The recovery is still on pretty unsteady legs.

He said there could be damaging consequences if interest rates continued to rise.

“It’ll be a somewhat tighter squeeze. It increases a bit the risk of us actually entering recession this year, there’ll be impacts for the labour market from joblessness,” he said.

“We can afford to take a bit more time to get inflation back down to target. That would be a price worth paying for keeping the economy moving and jobs in place.”

Mr Haldane, who has advised the Tories and Labour, also said that both parties needed to be more ambitious with their fiscal rules.

“There’s not so much as a fag paper to put between Labour and the government when it comes to fiscal rules and fiscal rectitude right now,” he said. “That, for me, really lacks ambition at a time when it’s still, by any historical standard, incredibly cheap for governments to borrow.”

He was critical of the UK for lagging behind the rest of the world on industrial policy, highlighting the US Inflation Reduction Act which offers subsidies and tax breaks for products made in America.

Mr Hunt has insisted that the UK will not enter into a global subsidy race, but Mr Haldane, who sits on his advisory council, said that when making international comparisons “almost everyone’s doing better than us”.

He added: “Pretty much every country on the planet now is engaged in very active industrial policy and regional policy,” he said. “An arms race of reindustrialisation is under way. We need to play catch-up in that arms race.”