The British economy contracted for the second consecutive month in October after official figures showed a decline of 0.1%.
The economy was expected to return to growth after a slump in September.
However, the Office for National Statistics (ONS) said activity was stalling or declining, with pubs, restaurants and retail among the sectors reporting “weak months”.
Chancellor Rachel Reeves said the figure was “disappointing” but added: “We have policies in place to ensure long-term economic growth.”
KPMG chief economist Yael Selfin said activity was “hampered by uncertainty surrounding the October 30 budget” as businesses and consumers curbed spending.
The economy has grown just once in the past five months, according to Capital Economics, and is 0.1% below its level before Labor won the July election.
“This suggests that it is not just the Budget that is holding back the economy,” said Paul Dales, Capital's UK chief economist.
“Instead, the harmful effect of rising interest rates may last longer than we thought.”
The Bank of England has cut interest rates twice this year, but at 4.75% they remain relatively high compared to previous years.
The Bank will meet next week to make the final decision on 2024 interest rates, although it is not widely expected to cut borrowing costs again until next year .
