The economy contracted between July and September, revised official figures reveal.
Gross domestic product (GDP) fell by a revised 0.1 per cent against the zero growth initially estimated, the Office for National Statistics (ONS) has said.
The figures mean the UK could already be in recession, defined as two consecutive quarters of negative growth, with the fourth quarter figures unveiled next year.
There was also zero growth between April and June after the initial calculations showed a 0.2 per cent rise in the second quarter.
It comes after senior Tories warned the Bank of England must cut interest rates in the new year or risk plunging the UK into a recession.
In response to the downgraded growth data, Chancellor Jeremy Hunt insisted: “The medium-term outlook for the UK economy is far more optimistic than these numbers suggest.
“We’ve seen inflation fall again this week, and the OBR [Office for Budget Responsibility] expects the measures in the Autumn Statement, including the largest business tax cut in modern British history and tax cuts for 29 million working people, will deliver the largest boost to potential growth on record.”
Shadow Chancellor Rachel Reeves accused the Prime Minister of having “failed to grow the economy”.
Responding to the latest GDP figures, Ms Reeves said: “Rishi Sunak is a Prime Minister whose legacy is one of failure. He failed to beat Liz Truss, he failed to cut waiting lists, he failed to stop the boats and now he has failed to grow the economy.
“Thirteen years of economic failure under the Conservatives have left working people worse off with higher bills, higher mortgages and higher prices in the shops.”
ONS director of economic statistics, Darren Morgan, said the latest VAT data, which takes a while to process, indicated no growth in the second quarter.
There had been weaker performances from smaller businesses, particularly in hospitality and IT, than first shown, the figures showed.
“We also now estimate the economy contracted slightly in the third quarter, when we previously reported no growth, with later returns from our business survey showing film production, engineering and design and telecommunications all performing a little worse than we initially thought,” he said.
Retail sales grew strongly in November as heavy Black Friday discounting encouraged shoppers to spend.
But Mr Morgan added: “With the three-month trend continuing to fall and overall sales still below pre-pandemic levels, it’s still a challenging time for retailers.”
Mr Hunt said on Thursday that he plans to “cut the tax burden if we are able to” in the Spring Budget, due in the first half of March, and indicated that lower debt interest payments and falling inflation could provide the room to do so.