UK growth accelerated over the summer but statisticians said on Thursday that GDP was weaker than first thought in earlier months as the government admitted that the economy felt “stuck” for many families.

The Office for National Statistics (ONS) said that economic output expanded by 0.3 per cent in the three months to August, in line with analysts’ forecasts, compared with growth of 0.2 per cent in the three months to July.

In August alone the economy grew by 0.1 per cent, also matching the consensus forecast, but the ONS said that GDP contracted by 0.1 per cent in July, a downward revision from zero growth previously.

It said that the dominant services sector had fuelled the economy over the past three months, growing by 0.4 per cent, the same as the previous quarter. Construction output increased by 0.3 per cen but production activity contracted by the same degree.

Liz McKeown, director of economic statistics at the ONS, said: “Economic growth increased slightly in the latest three months. Services growth held steady, while there was a smaller drag from production than previously.

“Continued strength in business rental and leasing and healthcare were the main contributors to services growth, partially offset by weakness in some consumer-facing services, while wholesalers also fared poorly.”

Analysts also said that government spending had fuelled the economy, although they warned that speculation about tax rises before the budget could constrain growth if it caused households and businesses to curb spending.

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Yael Selfin, chief economist at KPMG UK, said: “Government spending was a key driver of growth in the first half of the year but that is set to slow. Additionally, uncertainty around the composition of any potential tax rises, alongside the timing of the budget in late November, is expected to weigh on activity for both households and businesses. As a result we anticipate growth to remain sluggish over the coming months.”

Ruth Gregory, deputy chief UK economist at Capital Economics, a research outfit, said that tax increases at the budget last year “are undoubtedly playing a part in restraining growth”, pointing to the quarterly growth rate slowing from 0.7 per cent over the spring when the £25 billion payroll tax raid and 6.7 per cent rise in the minimum wage kicked in.

“The economy is now running at a lower gear after a strong start to the year,” Sanjay Raja, chief UK economist at Deutsche Bank, said.

Rachel Reeves, the chancellor, is preparing for a challenging budget on November 26 in which she is expected to increase taxes by tens of billions of pounds to replenish the public finances.

In a report released today the Institute for Fiscal Studies said that the chancellor could be grappling with a fiscal hole of more than £20 billion owing to weaker than previously forecast medium-term growth, an expected productivity downgrade and higher government borrowing costs.

The think tank urged the chancellor not to raise taxes that pushed up inflation, such as the main rate of VAT, which Labour ruled out in its manifesto, or another rise in employer payroll taxes, as these are more damaging to growth. The Bank of England has said that Reeves’s £25 billion national insurance contributions increase for employers had prevented inflation from declining as quickly as it had hoped.

The ONS said this week that unemployment had edged up to 4.8 per cent over the past three months, the highest level since the third Covid-19 lockdown in early 2021. Inflation remained at a 19-month high of 3.8 per cent in July and August and is expected to increase to 4 per cent in September.

The International Monetary Fund said this week that the UK would register the second fastest economic growth in the G7 this year, behind the US, at 1.3 per cent, a small upgrade from a previous forecast.

A spokesperson for the Treasury said: “We have seen the fastest growth in the G7 since the start of the year but for too many people our economy feels stuck: [they are] working day in, day out without getting ahead.

“The chancellor is determined to turn this around by helping businesses in every town and high street grow, investing in infrastructure and cutting red tape to get Britain building.”