The International Monetary Fund (IMF) significantly lowered its UK growth forecast for 2012 on Monday to 0.2% and warned the risks from the eurozone debt crisis "continue to loom large".
Its forecast was reduced from 0.8% just three months ago - more than any other developed nation - reflecting the UK's slide into a double-dip recession in the first quarter of the year and the gloomier outlook for the world economy.
The IMF also lowered its expectations for the UK's growth next year to 1.4%, from 2% previously.
The news comes amid mutterings about George Osborne's job performance. Tellingly, even readers of the staunchly Conservative Daily Telegraph are becoming increasingly fed up with the Chancellor.
In a poll, they have voted him as the Cabinet minister they'd most like to see given a new role in the reshuffle expected in September.
The Sun's influential commentator Trevor Kavanagh has also piled on the pressure.
He said: "[David Cameron] needs to carry out a Cabinet reshuffle and reassert his grip on Downing Street’s loosely managed engine room.
"That will require some uncharacteristic butchery. Some of his pals must go. Top of his list is George Osborne."
What's more, the bookies' odds on Osborne being stripped of his current role aren't that long, with William Hill giving odds of 6/1 on the Chancellor being out by the end of 2012.
Labour's shadow chancellor Ed Balls said the forecasts that showed the UK seeing a bigger downgrade than any other G8 country were "yet more evidence that the government’s economic plan has failed".
“David Cameron and George Osborne must now accept they need to act to get the recovery back on track," he said.
"There can no longer be any excuses for delay. We need a change of course and urgent action now to boost the British economy.
"If we fail to act now, and we see years of slow growth and high unemployment being entrenched, Britain will pay a heavy long term price."
The IMF warned that policymakers need to take further action to get to grips with the eurozone crisis and to help arrest the slowdown in emerging markets, whose potential to contribute to the global economy may have been overestimated.
It said: "Clearly, downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action."
The IMF stuck with its previous forecast for the eurozone to contract by 0.3% this year despite policymakers having recently taken "steps in the right direction" but warned the situation will remain "precarious".
The IMF called on politicians to build on recent moves to agree to lend money to Spain's banks by making more progress on creating a banking and fiscal union, while urging periphery countries to stay on track with budget reforms.
It said: "The most immediate risk is still that delayed or insufficient policy action will further escalate the euro area crisis.
"The very recent, renewed deterioration of sovereign debt markets underscores that timely implementation of these measures, together with further progress on banking and fiscal union, must be a priority."
Advanced economies saw their forecasts for 2013 lowered to 1.9%, from 2.1% previously, reflecting the eurozone debt crisis, which ratcheted up to levels not seen since the end of 2011.
Meanwhile, growth in emerging markets, such as China, India and Brazil, has slowed and the IMF admitted that previous forecasts may have been "overly optimistic".
It predicts emerging market growth of 5.6% this year, slightly lower than its previous estimate.
The global economy will grow by 3.5% in 2012 and 3.9% the following year, marginally lower than its forecast three month ago.