Productivity and the housing market are the key risks facing the U.K., the International Monetary Fund has warned.
The IMF's comments will add to growing concerns of a bubble in the country's housing market, particularly in London and the South-East.
The Bank of England should keep monetary policy on hold for the moment, the fund said.
However, the U.K.'s economy has broadly "rebounded strongly" according to the IMF.
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Interest rates should be raised before the Bank of England starts reducing its quantitative easing, the fund advised.
Chancellor of the Exchequer George Osborne said he was very aware of the "risks" to U.K. growth and agreed unemployment was not falling quickly enough.
"We need to remain vigilant for any risks that may remain in the housing market," he said.
Britain's economy expanded for the fifth quarter in a row in the first three months of the year -- although the growth rate came in slightly below expectations.
Preliminary data, released by the Office of National Statistics (ONS) in April showed that first-quarter gross domestic product (GDP) came in at 0.8 percent on the quarter. Economists had expected growth of 0.9 percent.