"U.K.'s large productivity puzzle persists," said NIESR in its November journal. "Should this fail to recover as we expect, the impact on both living standards and public finances will be significant."
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Externally, NIESR said the weakness of the global recovery and, in particular, continued stagnation in the euro area, were also significant risks for the U.K.
On Tuesday, the European Commission warned that European economy was "not improving fast enough" and slashed its growth forecasts. The euro zone is now seen growing by 0.8 percent this year and 1.1 percent next.
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In better news for the U.K., Barclaycard reported on Wednesday that consumer spending in the country rose by 4.2 percent during the third quarter—the biggest rise since 2011.