The Office for National Statistics (ONS) reports zero GDP growth during the July-September period, a downward revision from the previously reported 0.1 percent growth.
This data reflects the early months of the Labour government's tenure, leading up to its much-anticipated first budget at the end of October.
These figures pose a setback for Prime Minister Keir Starmer, who assumed office in July with a commitment to enhance economic growth following 14 years of Conservative governance.
The government is also facing difficulties in gaining the support of British businesses, particularly after its budget introduced significant tax increases for companies, projected to generate approximately £25 billion ($31 billion).
"There’s not much optimism surrounding the UK’s economic outlook," remarked Susannah Streeter, head of money and markets at Hargreaves Lansdown.
"The economy remained stagnant between July and September, and this was prior to the budget, which further dampened sentiment and led to a contraction in October," she noted.
The revised growth figure falls short of economic forecasts predicting a 0.2 percent increase, with analysts linking the slowdown to uncertainty surrounding the budget.
"The challenge we face in revitalizing our economy and adequately funding public services after 15 years of neglect is substantial," stated finance minister Rachel Reeves in response to the latest figures.
"However, this only strengthens our resolve to deliver for working individuals," she added.
Additionally, the ONS adjusted its second quarter growth estimate down to 0.4 percent from 0.5 percent.
On the same day, the Confederation of British Industry (CBI) cautioned about a "steep" decline in private-sector activity anticipated in the first quarter of 2025, attributing this to the effects of the tax increases outlined in the budget.
The economy is facing a challenging scenario, with businesses anticipating reductions in both production and workforce, while expectations for price increases are becoming more pronounced, stated Alpesh Paleja, interim deputy chief economist at the CBI.
In contrast, analysts maintain a somewhat more optimistic outlook.
"Our belief is that 2025 will present a more favorable economic environment compared to 2024," remarked Paul Dales, chief UK economist at Capital Economics.
He noted that current data indicates the economy stalled in the latter half of the year, influenced by persistent high interest rates, diminished foreign demand, and uncertainties surrounding budgetary policies.
Nevertheless, he added, "recent data implies that the economy lacks significant momentum as the year draws to a close."