Britain’s economic recovery might stall if interest rates rise too soon, the Bank of England’s chief economist said today as he offered the strongest signal yet that the bank is prepared to delay increases in borrowing costs.

Andrew Haldane said he was more downbeat about the outlook for the economy, given weaker global growth, greater financial and political risks and the danger that wages and productivity in Britain might continue to fail to recover as forecast. "Put in rather plainer English, I am gloomier," Mr Haldane said in a speech to businesses in central England.

“This implies interest rates could remain lower for longer, certainly than I had expected three months ago.” Mr Haldane, who took over as chief economist at the BoE in June, gave an unusually specific steer to financial markets on when the BoE might start to raise interest rates.

In an interview with ITV television, he said market expectations that rates might rise “somewhere in the middle of next year” were possibly “not a bad bet” although the economic outlook could change a lot before then. Sterling fell by around half a cent against the dollar after Haldane’s speech was released. It also dipped against the euro.

UK base rates have sat at a record low of 0.5 per cent since the depths of the financial crisis more than five-and-a-half years ago. Market expectations of when they will finally rise have swung sharply in the past few days after the biggest global sell-off of shares in two years due to fears of slower growth and rising political risk.

Marc Ostwald, a fixed income strategist at ADM Investor Services International, said markets were currently betting on a rate rise around September, though earlier this week some measures had implied no increase in rates at all next year.