The UK economy saw the biggest monthly contraction for a year-and-a-half in April in a setback to Chancellor Rachel Reeves.

The Office for National Statistics (ONS) said that gross domestic product (GDP) fell by 0.3% in April, compared with growth of 0.2% the previous month and marking the biggest contraction since October 2023.

It was also worse than the 0.1% contraction expected by most economists.

Ms Reeves acknowledged that the latest GDP figures were “clearly disappointing” but insisted her spending review would help deliver growth.

The Chancellor said: “Our number one mission is delivering growth to put more money in people’s pockets through our plan for change, and while these numbers are clearly disappointing, I’m determined to deliver on that mission.”

ONS director of economic statistics Liz McKeown said declining output in services and manufacturing sectors both dragged on overall GDP in April.

She said: “However, over the last three months as a whole GDP still grew, with signs that some activity may have been brought forward from April to earlier in the year.”

She added: “Both legal and real estate firms fared badly in April, following a sharp increase in house sales in March when buyers rushed to complete purchases ahead of changes to stamp duty.”