UK Publications
Below is a list of our UK Publications for the last 5 months. If you are looking for reports older than 5 months please email info@pantheonmacro.com, or contact your account rep
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- We now expect CPI inflation to drop to 3.0% in April from 3.3% in March, in line with the MPC’s call.
- But our forecast is close to rounding down to 2.9%, and uncertainty is high, with many price resets.
- Smaller water-bill and vehicle-tax hikes than in 2025 will slow inflation, but rents will rise by more this April.
- The gilt sell-off has further to run if Sir Keir Starmer is forced out of office in the next few weeks.
- We expect the initial payrolls estimate to show a 10K month-to-month drop in April.
- The unemployment rate should hold at 4.9% in March, and private pay growth should be unchanged.
- We expect CPI inflation to slow to 2.9% in April from 3.3% in March.
- Utility prices fell 6.6% in April, and a range of government-set prices will rise less than a year earlier.
- Our CPI inflation call is 0.1pp lower than rate-setters expect, but we match their services inflation forecast.
HOUSE PRICES JUMP IN FEBRUARY...
- ...BUT WE STILL EXPECT HOUSE PRICE INFLATION OF 1% IN Q4
- The bar to the MPC returning to rate cuts, if oil prices fall, looks high, as growth and inflation are holding up.
- But a thin Iran-US deal, if signed, would lead us to shift to one or no hikes this year.
- Disastrous local election results for the Labour Party will keep political risk elevated
- GDP likely declined in March, with falls across the board in the major activity components.
- We still expect quarter-to-quarter GDP growth of 0.5% in Q1, matching the MPC’s forecast.
- Underlying growth likely held firm in March; a good result given the shock of the Iran war.
- We will need to remove a rate hike from our forecast if the peace-plan-related energy-price fall is sustained.
- But the April PMI suggests that firms are already contending with surging inflation pressures…
- ...And resilient growth means that rate-setters must prioritise price pressures over output losses.
- MPC members argued that tighter financial conditions were doing the job of rate hikes for now.
- The Market Participants Survey in particular appears to have been influential in Governor Bailey’s view.
- But the MaPS suggests the MPC will have to hike this summer to maintain financial conditions.
- The activity data since our last forecast review have been solid, implying little damage from the Iran war...
- ...So firms’ pricing pressure looks strong to us, and the soft data point to a quick passthrough of higher costs.
- We now look for two 25bp hikes to Bank Rate this year, with three cuts to come across 2027 and 2028.
- In one line: Not as good as it looks, but the PMIs still say the MPC should worry more about inflation than growth.
- In one line:The Chancellor will need to borrow more than expected in the upcoming fiscal year.
- In one line: Core producer output price inflation will jump in the coming months according to the CBI.
- In one line: Higher inflation means consumers’ confidence will remain weak in 2026.
- In one line:Tentative signs that consumers are willing to run down their high saving rate to support consumption.
GROWTH HOLDS UP WHILE INFLATION JUMPS...
- …SO WE EXPECT AN MPC RATE HIKE IN JUNE
- The MPC’s decision to hold rates, and the vote split, were in line with consensus.
- The MPC’s guidance suggests to us a couple of rate hikes this year, fewer than the market had priced.
- Mr. Bailey’s communication in the press conference jarred with MPC scenarios, so we detail our take.
- Household inflation expectations eased—although were still high—in April, according to YouGov.
- But we think the MPC can take limited comfort, because expectations still look de-anchored.
- Consumers are more attentive to inflation now than before 2022, raising risks of second-round effects.
- The latest public finances data show cumulative borrowing for 2025/26 close to the OBR’s forecasts.
- But that respite will be short-lived, as the war in Iran increases borrowing in 2026/27 by about £19B.
- The Chancellor’s headroom is less affected, as long as gilt yields and inflation fall back in future years.
- Retail sales were boosted by fuel purchases in March, which will unwind as demand normalises...
- ...but we see tentative signs that households are willing to reduce their high saving rate to smooth spending…
- ...and the GfK’s major purchases balance held firm in April, suggesting that retail sales can grind higher.
- Risks are skewed to a hawkish hold by the Bank of England as the DMP shows rising price pressures.
- A slew of surveys last week suggests inflation risks are more prominent than growth weakness.
- Bank Rate expectations are moving with oil prices rather than economic data.
