The UK economy was weaker than initially estimated between July and September, revised official figures show.
The economy had zero growth in the three months, revised down from an earlier estimate of 0.1%.
Chancellor Rachel Reeves said the challenge to fix the economy “after 15 years of neglect is huge” and October’s Budget would “deliver sustainable long-term growth, putting more money in people’s pockets”.
But one of the UK’s leading business groups, the CBI said its latest company survey suggested “the economy is headed for the worst of all worlds”.
The downward revisions will be a blow to Labour which has made boosting economic growth its top priority.
It has promised to deliver the highest sustained economic growth in the G7 group of rich nations.
The revised data comes after a series of disappointing figures including inflation rising at its faster pace for eight months, and the economy unexpectedly shrinking in October.
The Bank of England voted to hold interest rates on Thursday, stating it thought the UK economy had performed worse than expected, with no growth at all between October and December.
Job cuts and price rises
Firms have warned that measures announced in October’s Budget including a rise in employer national insurance and a higher minimum wage could push them into raising prices and reducing the number of new jobs they create.
The CBI, which claims to represent 170,000 firms, said companies expect to “reduce both output and hiring” and raise prices as a result of the tax rises.
The survey, based on responses of 899 firms between 25 November and 12 December, said private sector businesses across all industries expected a “steep decline in activity” in the first three months in 2025.
“Expectations are now at their weakest in over two years,” said Alpesh Paleja, the CBI’s interim deputy chief economist.
“Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tepid demand environment,” he added.
‘Spending squeeze’
A separate survey by the British Retail Consortium, which represents UK retailers ranging from Marks and Spencer to Tesco, suggested a “January spending squeeze on the horizon” for consumers.
It said “public confidence in the state of the economy took a nosedive” this month, according to its consumer sentiment survey.
“If these expectations are realised, retailers could find themselves facing a New Year spending squeeze just as they unveil their January sales,” said Helen Dickinson, chief executive of the BRC.
“With sales growth unable to keep pace, retailers will have no choice but to raise prices or cut costs – closing stores and freezing recruitment.”
No growth to disposable income
The UK economy is measured by gross domestic product – a measure of all the economic activity of companies, governments and people in the country.
The ONS puts out initial estimates on the UK’s economic performance and revises them once it receives more data.
On Monday it also revised down growth figures for April to June to 0.4% from 0.5%.
It said the economy was weaker than initially estimated as bars and restaurants, legal firms and advertising firms performed less well.
“Real household disposable income per head showed no growth,” ONS director of economic statistics Liz McKeown said.
