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
A lawyer representing 35 families who lost loved-ones when a pilot deliberately crashed his plane 'can't explain' €25,000 offer.
Visitors were evacuated from a rollercoaster at Alton Towers after a power cut forced the ride to grind to a halt.
A town centre water fountain is under threat after repeated attacks by 'bubble vandals', costing hundreds of pounds to repair and clean.