The UK economy was weaker than initially estimated between July and September, revised official data showed.
The economy grew at zero in the three months, below the first estimate of 0.1%.
Chancellor Rachel Reeves said “the challenge of recovering the economy after 15 years of neglect is enormous” and October’s Budget would “deliver sustainable long-term growth while putting more money in people’s pockets”.
But the CBI, one of Britain’s leading business groups, said its latest company survey suggested “the economy is heading for the worst of all worlds”.
A downward revision would be a blow to Labor, which has made economic growth its top priority.
It promises to deliver the most sustainable economic growth in the G7 group of rich nations.
Separate data last week showed that inflation – the rate at which prices rise over time – rose at its fastest pace since March.
The Bank of England voted to keep interest rates on hold on Thursday, saying it believed the UK economy had performed worse than expected, with no growth between October and December.
Firms have warned that measures announced in the October Budget, including an increase in employers’ national insurance and a higher minimum wage, could force them to raise prices and reduce the number of new jobs.
The CBI, which claims to represent 170,000 firms, said companies expected to “reduce both output and employment” and increase prices as a result of the tax hike.
The survey, based on responses from 899 firms between November 25 and December 12, said private sector businesses across all industries expect a “sharp decline in activity” in the first three months of 2025.
“Expectations are now the weakest in two years,” said CBI interim deputy chief economist Alpesh Pulija.
“Businesses continue to cite the impact of the measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tight demand environment.
“As we move towards 2025, firms are looking to government to build confidence and give them a reason to invest.”
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 makes preliminary estimates of the UK’s economic performance and revises them as more data becomes available.
On Monday, it cut the growth rate for April-June to 0.4 percent from 0.5 percent.
It said the economy was weaker than initially estimated as bars and restaurants, law firms and advertising firms underperformed.
ONS director of economic statistics Liz McKeon said there was no increase in real household disposable income per capita.