The International Monetary Fund has warned the UK Government that it might need to slow the pace of budget cuts next year if growth does not improve.
Growth has been cut by 2.5% over the past two years due to tax rises and spending cuts introduced since spring 2010, according to the IMF's latest annual report on the UK.
Since it received a summary of the report in May, the Government has brought in measures such as providing funding for lending, aimed at boosting growth.
While these schemes have been backed by the IMF it has said that policies such as temporary tax cuts and more means-testing of benefits, should be considered if growth does not improve.
The IMF said: "If growth does not take off and unemployment fails to recede even after substantial further monetary stimulus and strong credit easing measures have been given time to work, the policy response should include a further slowing of fiscal consolidation."
Earlier this week, the IMF lowered its growth forecasts for the UK to 0.2% in 2012 and 1.4% in 2013.
the Government has brought in measures such as providing funding for lending, aimed at boosting growth.Have your say on this story using the comment section below