The International Monetary Fund (IMF) said British hopes for an export-led economic recovery are being hit as "declining productivity growth and high unit labour costs are holding back much needed external rebalancing".
The IMF suggested alternatives policy responses as it slashed the UK's growth forecasts for this year and the next.
Its report stated:
In the United Kingdom, other forms of monetary easing could be considered, including the purchase of private sector assets and greater transparency on the likely future monetary stance.
Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand.
More top news
NASA's Juno spacecraft has skimmed the clouds above Jupiter in a record-breaking close approach to the planet.
Sunny spells and scattered showers this Sunday
A fresh round of singing hopefuls put aside their nerves to face the X Factor judges as the talent show returns for a new series.