The UK economy has flatlined but has avoided a recession this year as Chancellor Jeremy Hunt warned high inflation remained the main obstacle to growth.

Fresh data from the Office for National Statistics shows that gross domestic product (GDP) – which measures the value of goods and services produced – rose by 0.2% over the month, amid a boost from the film production, health and education industries although growth in August was revised down to 0.1% from 0.2%.

While the figures indicate the economy failed to grow at all in the third quarter, it does mean the UK dodges a recession this year which is defined as two consecutive quarters of negative GDP.

Analysts had predicted a 0.2% fall for the latest period.

ONS director of economic statistics Darren Morgan said: “The economy is estimated to have shown no growth in the third quarter.

“Services dropped a little with falls in health, management consultancy and commercial property rentals.

“These were partially offset by growth in engineering, car sales and machinery leasing.

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“In the month of September the economy grew slightly, with increases in film production, health and education.

“This growth was partially offset by falls in retail and computer programming.”

The Bank of England said last week it expected zero growth in the economy next year but kept interest rates at a 15-year high as it continued to battle an inflation rate more than three times its 2% target.

The central bank had forecast a flat reading for growth in the third quarter.

Responding to the latest ONS data, Mr Hunt has said high inflation remained the single biggest barrier to growth and he would announce plans to unlock investment and get people back into work in his autumn budget statement on 22 November.

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