The Government should relax immigration rules to help ease the mortgage crisis gripping Britain, a former chancellor has urged.

Lord Hammond, who led the Treasury under Theresa May, said the Government has to strike a “balance” between the “politically toxic” increase in immigration with the impact of rising mortgage rates.

Relaxing immigration could help deal with record rises in wages across Britain by creating more competition for jobs and lowering workers’ ability to push for pay increases.

The Bank of England is poised to raise interest rates for the 13th time in a row at lunchtime after disappointing inflation figures showed price rises have not eased.

Traders are pricing in a nearly one in two chance that policymakers will make a half a percentage point rise in rates to 5pc, sending mortgage costs surging.

The average rate for a two-year fixed mortgage increased to 6.15pc on Wednesday, according to Moneyfacts.

Lord Hammond told LBC: “I don’t think The Bank [of England] has got much choice [but to tip the country into recession] unless the Government does something pretty significant intervening in the labour market in a different way.

“I think the Government has regarded any relaxation of migration rules as being politically toxic. 

“But rising mortgage rates on the scale we’re seeing is also politically toxic. 

“I think we might have to have a debate about the balance between the two of you.”

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