The downturn raises concerns about the Labour government’s ability to achieve its growth targets.

The decline was fairly broad, with consumer-facing services, manufacturing and construction all retreating. However, the Office for National Statistics (ONS) acknowledges that the timing of the Autumn Budget may have introduced some additional noise into this month’s data.

Matt Swannell, chief economic advisor to the EY ITEM Club, said: “For the second consecutive month, the dominant services sector was flat, masking a particularly weak reading in consumer-facing services, which fell by 0.6%. The manufacturing and construction sectors both contracted on the month, falling by 0.6% and 0.4%, respectively.

“A slow start to the final quarter of 2024 suggests that growth in Q4 will likely remain muted. Growth in Q3 slowed to 0.1%. However, the EY ITEM Club thinks the recent loss of growth momentum may be exaggerated by some noise in the data. Indeed, the ONS noted that survey respondents had provided mixed feedback on the impact of the October Budget, but its notable that businesses had seen some demand delayed until after the Budget.

“Looking to the new year, the EY ITEM Club expects solid but fairly limited growth. Higher real incomes and less consumer caution should support household spending, and there are good reasons to believe global growth will continue at a decent pace. But set against that, past interest rate rises will weigh on disposable incomes as some households continue to refinance mortgages at higher interest rates. The recent Budget loosened the purse strings. Nonetheless, fiscal policy is still set to tighten substantially, and further tax rises may be needed for the government to meet its fiscal targets.”

Kevin Brown, savings specialist at Scottish Friendly, said: “The fact that the economy shrank in October is a blow for the government, whose stated central mission is to get output firing again.

“However, it’s unsurprising. Business confidence has soured since the Budget, which saddled employers with higher national insurance costs that are expected to have a negative knock-on effect for the labour market.

“It just goes to show how much of a Herculean task it will be to boost the economy, which resembles someone walking through treacle at times.

“Unfortunately, the outlook doesn’t look much rosier, with interest rates set to stay higher for longer and president-elect Donald Trump expected to introduce blanket tariffs on imports, both of which would act as headwinds for the UK economy.

“The government talks a good game when it comes to growth, but now it needs to introduce pro-growth measures – and fast if UK households are going to start feeling the benefits any time soon.”