Jeremy Hunt has insisted the Government’s plan to grow the economy will work as figures showed the UK economy shrank in May.

As Office for National Statistics data showed the economy contracted by 0.1 per cent, the Chancellor argued his focus on halving inflation and reducing debt - which has seen taxes rise to a postwar high - would eventually pay off.

Mr Hunt said: “While an extra bank holiday had an impact on growth in May, high inflation remains a drag anchor on economic growth.

“The best way to get growth going again and ease the pressure on families is to bring inflation down as quickly as possible. Our plan will work, but we must stick to it.”

Labour accused the Government of a “low growth” approach and the figures illustrate the difficulty for Rishi Sunak in meeting his pledge to ‘grow the economy’.

It comes ahead of Mr Hunt meeting Mr Sunak this morning to reach a final decision on recommendations from each of the public sector pay review bodies.