The UK economy shrank for the second month in a row in October as concerns about the apportionment continued to weigh on confidence.

Official figures showed a 0.1% drop, despite expectations that the economy would profitability to growth after a fall in September.

The Office for National Statistics (ONS) said that activity had stalled or declined with pubs, restaurants and retail among sectors reporting “frail months”.

Chancellor Rachel Reeves said the figure was “disappointing”, but added: “We have put in place policies to deliver long-term market advancement.”

Shadow chancellor Mel Stride said: “This fall in growth shows the stark impact of the chancellor’s decisions and continually talking down the economy.”

KPMG’s chief economist Yael Selfin said that activity was “held back by uncertainty ahead of the apportionment on 30 October” as businesses and consumers held back on spending.

But some industries, such as real estate, law firms and accountancy, brought forward work before Reeves announced the apportionment, the ONS said.

Separately, a survey measuring buyer confidence in December found people were a little more positive about their personal finances for the year ahead.

But the findings from economy research firm GfK found that “views on the economy are unchanged from November which suggests people don’t recognize where we are going”.

“In a nutshell, it’s the continuing uncharitable view on the UK’s general economic circumstance that’s suppressing buyer confidence,” said Neil Bellamy, buyer insights director at NIQ GfK.

Shortly after becoming prime minister in July, Sir Keir Starmer warned that the apportionment would be “hurtful” following 14 years of Tory government.

He later denied that he was talking down the economy.

The economy has grown just once over the history five months, ONS figures display.

capital Economics said GDP was 0.1% lower than before Labour won the election in July.

“That suggests it’s not just the apportionment that is holding the economy back,” said capital’s chief UK economist Paul Dales.

“Instead, the drag from higher profit rates may be lasting longer than we thought.”

The lender of England has cut profit rates twice this year but, at 4.75%, they are still relatively high compared with recent years.

The lender will meet next week for the last profit rate selection of 2024, though it is not widely expected to reduce borrowing costs again until next year.

Economists cautioned about placing too much emphasis on the reading for October. It is an initial approximate of market advancement by the ONS and could be revised.

Over the three months to October, the economy expanded by 0.1%.

The manufacturing industry recorded the sharpest drop in activity in October, down 0.6%, followed by construction which fell by 0.4%.

Meanwhile, the services sector, which makes up the bulk of the UK economy, stalled with zero growth.

Rick Gaglio, owner of menswear shop Twisted Fabric in Hitchin, Hertfordshire, said “people are still being cautious”, and added that prices are still comparatively high.

“That’s just down to worth rise and customers are feeling those worth increases,” he said.

Mr Gaglio also said that retail sales were leisurely during the summer months due to wetter than usual weather.

“It’s been tough,” he said. “2024 generally for tiny businesses has been very, very tough and we just desire to listen more excellent information, not impoverished information.”

Sir Keir has said he wants the UK to secure the highest sustained market advancement of the G7 throng of wealthy nations.

Last week, he set out additional “milestones” to allow people to assess the government’s advancement. On the economy, he has pledged to boost real household disposable turnover per person.

He also reiterated a commitment to construct 1.5 million homes in England.

Sign up for our Politics Essential newsletter to read top political analysis, gain insight from across the UK and remain up to speed with the large moments. It’ll be delivered straight to your inbox every weekday.