Young people in Britain are bearing the brunt of a “low-gear economy” as employers hold back from hiring amid the fallout from the war in the Middle East, a deputy governor of the Bank of England has warned.

Clare Lombardelli, the Bank’s deputy governor for monetary policy, said the unfolding conflict, which has triggered a surge in energy prices and clouded the outlook for the economy, was contributing to an increase in youth unemployment.

“What you see is the cost falling on young people, so you can see this rapid rise in the number of young people who are struggling to find jobs,” she said.

Against a highly volatile backdrop, she also warned Threadneedle Street was preparing for a “live” decision on interest rates next month after it increased the cost of borrowing last week for the first time in three years .

In an interview with the Guardian, Lombardelli said the UK’s employers were attempting to navigate the complex geopolitical backdrop by holding on to staff and freezing new recruitment.

“It’s…