BRITAIN is “dangerously close to recession,” the TUC warned today as news that the economy shrank in October dealt a blow to one of the Prime Minister’s five priorities.

Gross domestic product (GDP) is estimated to have fallen by 0.3 per cent during the month, down from a 0.2 per cent growth in September, the Office for National Statistics (ONS) said.

It came as all three of the main sectors that the ONS tracks fell into negative territory for the first time since July.

Economists had expected GDP to contract by just 0.1 per cent.

The worse-than-expected reading comes as the Bank of England is to set a new interest rate on Thursday.

PM Rishi Sunak’s priorities for the year were to halve inflation, grow the economy, reduce debt, cut NHS waiting times and stop small boat crossings.

But the fall in GDP shows that the overall picture for 2023 is set to be one of stagnation.

On his promise on inflation, and with figures falling to 4.6 per cent in October, Mr Sunak said that he has “delivered” on his “top priority” for the year and asked the public to judge his government on “results.”

Economists have suggested the fall was largely due to lower energy costs and rising interest rates rather than government action.

And BoE governor Andrew Bailey previously voiced caution, saying it was “much too early to declare victory” against inflation and that it remained “too high” at more than double the bank’s target rate of 2 per cent.

TUC general secretary Paul Nowak said that the “red warning lights should be flashing,” adding: “These grim figures show the UK is dangerously close to recession.

“Unemployment is rising, vacancies are falling and living standards have plummeted.

“Rishi Sunak — and his cabinet of millionaires — may be cushioned from flatlining growth.

“But this Conservative economic failure is hitting jobs and living standards across Britain.”

Mr Nowak warned that Britain is “stuck in a rut and the Tories have no plan for getting us out of it.”

Unite general secretary Sharon Graham said: “It’s no surprise that growth continues to stagnate after two years of interest rate hikes and an autumn statement promising more spending cuts.

“When politicians tell workers that they have to wait for growth before they can have a pay rise, we know that’s just an excuse for another lost decade of falling living standards.

“The growth that matters to people isn’t GDP figures but putting cash in their pockets.

“We won’t see sustainable growth until we see sustainable rises in wages.”

Shadow chancellor Rachel Reeves said Mr Sunak has ended the year having failed to deliver on his promise to grow the economy.

The Labour MP said: “Economic growth is going backwards leaving working people worse off.

“After 13 years the Conservatives have failed on the economy and after the chaos of the past few weeks Rishi Sunak is clearly too weak to deliver for Britain.”

Chancellor of the Exchequer Jeremy Hunt said: “It is inevitable GDP will be subdued whilst interest rates are doing their job to bring down inflation.

“But the big reductions in business taxation announced in the autumn statement mean the economy is now well placed to start growing again.”