Interest rates may need to rise this year says Bank of England economist

He said that productivity, which measures how efficiently people work, has slowed down in the UK.

It is also a particular problem in Wales where it is the lowest of the four home nations and around 15 percent lower than the UK average, external.

People in Wales also earn lower wages than the UK average, and the country has some of the highest rates of welfare claims.

Pill said improving the efficiency of the Welsh economy is the key to raising living standards.

Things like better infrastructure “to link places together” and creating “a better educated workforce” are recognised drivers of productivity.

But he acknowledged that it is “a very difficult thing to deliver” in an uncertain world, where “public finances are constrained” and politicians face “hard decisions”.

Before joining the Bank of England, Pill previously worked at the European Central Bank from its inception through to the Eurozone crisis, when the survival of the single currency was in jeopardy.

He said the ability of a central bank to set interest rates and print money were powerful tools, but they were also blunt tools.

“It doesn’t allow you to solve all problems,” he said.

Pill said countries like Greece, Spain Portugal and Ireland had to go through “a lot of pain”, with politicians making “difficult decisions” about changing their economies.

But “they have come out the other side in stronger shape,” he argued.