Gross domestic product edged 0.1% higher in the third quarter, from a 0.5% rise between April and June, according to estimates from the Office for National Statistics, due to rises in retail trade and new construction work.

However, in September alone growth fell by 0.1%.

Many businesses blame the slowdown on tax rises in Chancellor Rachel Reeves’ Budget last month, which they say will hit employment and push up prices.

In the Budget, employer’s National Insurance contributions will rise from 13.8% to 15%, bringing in around £25bn a year for the Treasury.

CBI lead economist Ben Jones says that the rise along with other measures “is expected to trigger a more cautious approach to pay, hiring and investment.”

Reeves says today: “Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers.”

Some economists argue this slowdown in growth may move the Bank’s rate-setting Monetary Policy Committee to cut the base rate from 4.75% at its December meeting, where a hold was widely expected.

Wealth Club investment manager Isaac Stell says: “The UK economy looks to have lost some momentum during the third quarter of 2024”.

He adds: “The latest figures are likely to open the door to further rate cuts by the Bank of England before the year end.”

University of Liverpool Management School Professor Costas Milas points out: “Today’s gross domestic product reading is a worry, and more so the month-on-month drop by 0.1%. The Monetary Policy Committee of the Bank of England will decide again on interest rates on Thursday 19 December.

“By that time, the Monetary Policy Committee will surely be aware of October’s gross domestic product reading. If gross domestic product in October drops again, following September’s drop, there is a good chance the Monetary Policy Committee will cut rates.

“Think about this possible decision as ‘insurance policy’ against the rising risk of recession also related to [US President-elect] Donald Trump’s trade wars.”

However, abrdn deputy chief economist Luke Bartholomew points out that last month’s Budget will lift government spending by £70bn over the next five years, which will push up inflation and growth in 2025.

Bartholomew says: “In that context, this [gross domestic product] data will probably do little to change the thinking at the Bank of England.”

“We continue to expect further gradual easing, with the next rate cut coming early next year.”

Prior to today’s gross domestic product reading, money markets had only expected the Bank of England to cut rates twice next year, with no further reduction before the end of 2024.