Chancellor Rachel Reeves admitted new figures showing the UK economy unexpectedly declined were “disappointing”.
The Office for National Statistics (ONS) said gross domestic product (GDP) contracted 0.1% in October, despite most economists expecting it to rise by 0.1%.
It comes as the Labour Government is facing an ongoing backlash for huge tax hikes in the autumn Budget.
Responding to the figures, the Chancellor said: “We are determined to deliver economic growth as higher growth means increased living standards for everyone, everywhere. This is what our Plan for Change is all about.
“While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth.
“We have put public finances back on a stable footing, capped the rate of corporation tax at the lowest level in the G7, established a £70 billion National Wealth Fund to drive growth in our towns and cities, launched a 10-year infrastructure strategy and are creating pension mega funds to boost investment in British businesses, infrastructure and clean energy.”
Tory shadow chancellor Mel Stride warned that stalling growth will lead to higher taxes.
He said: “It is no wonder businesses are sounding the alarm. This fall in growth shows the stark impact of the Chancellor’s decisions and continually talking down the economy.
“Labour were left the fastest growing economy in the G7 but because of their decisions growth is now under serious pressure.
“The impact will be felt by families through higher taxes, fewer jobs, higher prices and higher interest rates.”
The latest figures from the ONS come after it recorded 0.1% growth between July and September, a slowdown on the 0.4% increase between April and June.
Liz McKeown, the ONS’s director of economic statistics, said: “The economy contracted slightly in October, with services showing no growth overall and production and construction both falling.
“Oil and gas extraction, pubs and restaurants and retail all had weak months, partially offset by growth in telecoms, logistics, and legal firms.
“However, the economy still grew a little over the last three months as a whole.”
