Pantheon Publications
Below is a list of our Publications for the last 5 months. If you are looking for reports older than 6 months please email info@pantheonmacro.com, or contact your account rep.
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Elliott Laidman Doak (Senior UK Economist)
- In one line: Manufacturing output to remain weak in Q4.
- The Government’s U-turn on hiking income tax shows that the political situation is deteriorating…
- ...So, we raise our forecast for the 10-year yield to end 2025 at 4.65%, and the 30-year at 5.45%.
- Risks to yields are upward as a potential Labour Party leadership challenge increases the pressure to spend.
- The labour market report was dovish, as it showed employment falling and wage growth easing sharply.
- Weak jobs all but seal a December Bank Rate cut; we are close to forecasting another in spring 2026…
- …But surveys are stable, and we have doubts about the sharp rise in the unemployment rate.
HOUSE PRICES ROSE IN AUGUST...
- ...BUT THE MARKET WILL REMAIN SUBDUED IN Q4
- We expect GDP to rise by 0.1% in September, boosted by solid retail sales and car registrations.
- Industrial production likely cut 8bp from GDP growth in September as a cyber attack halted autos output.
- Resilient economic activity means the MPC has little scope to cut quickly in 2026, in our view.
- We expect ‘final’ payrolls to be unchanged month-to-month in October.
- The bulk of evidence points to employment growth stabilising as the hit from payroll-tax hikes fades.
- Private pay growth should slow further, encouraging MPC doves that they can cut rates in December.
- The insolvency rate has plateaued above pre-pandemic levels but is unthreatening.
- We see little indication that higher insolvency rates will lead to a sharp rise in unemployment.
- Insolvency numbers will fall as businesses adjust to higher interest rates and GDP growth holds firm.
THE INFLATION OUTLOOK IS IMPROVING...
- …BUT A RETURN SUSTAINABLY TO 2% WILL BE PROTRACTED
- Healthy credit flows imply businesses and consumers remain confident ahead of the Budget…
- …and mortgage approvals rising to a nine-month high suggests the housing market is still solid.
- Rumours of a larger productivity downgrade by the OBR make an income-tax hike more likely.
- Solid activity data suggest that fundamental demand in the housing market is holding firm…
- ...but house price inflation remains weak, because of April’s stamp-duty hike and worries about the Budget.
- So, we retain our call for house prices to rise by just 2.5% year-over-year in 2025.
- In one line: Manufacturing activity will manage only small gains in the coming months.
- Soft inflation data and the prospect of greater fiscal headroom mean we cut our gilt-yield forecasts.
- We now expect the two-year gilt yield to end the year at 3.80%, and the 10-year at 4.55%.
- All of the good news is priced into yields, increasing the risk of a post-Budget market disappointment.
- We expect GDP to be unchanged in August, as an erratic fall in mining output drags on growth…
- …Services activity likely saved GDP from a fall, with rebounds in large sub-sectors boosting growth.
- We think that underlying economic activity remains firm, which will keep the MPC on hold this year.
- Gilt auctions are still well supported, and financial conditions are orderly, despite high uncertainty…
- ...but yields will remain high as the MPC stays on hold and markets demand a premium for political risk.
- We expect 10-year and 30-year gilt yields to end 2025 at their current rates of 4.7% and 5.5%, respectively.
- In one line: Manufacturing output will slowly recover in the coming months.
- Data in the past month have been a mixed bag, but underlying activity is holding up well.
- We retain our call for quarter-to-quarter GDP growth of 0.2% in Q3, matching the consensus estimate.
- Solid growth will limit the emergence of spare capacity, keeping the MPC on hold for the rest of 2025.
- Consumers’ confidence fell in September but remains higher than the economic fundamentals would imply.
- Optimism among younger demographics is supporting consumers’ confidence.
- The November Budget and inflation averaging 3.3% over the coming year represent risks to sentiment.
- The ONS’s measure of house prices dropped by 0.7% on a seasonally adjusted basis in July.
- Forward-looking indicators for the housing market suggest that activity will remain muted in H2.
- The November Budget represents a wild card for house prices, as rumours of property-tax hikes swirl.
- The PMI’s headline activity index fell in September and signals quarter-to-quarter growth of 0.1% in Q3...
- ...But the PMI has been more erratic lately than usual, so we retain our call for growth of 0.2% in Q3.
- Easing price pressures will encourage the MPC, but solid growth will limit emergence of spare capacity.
- The public finances deteriorated in August; borrowing is now drifting well above profile.
- Weak receipts account for most of the fiscal underperformance so far this year.
- We think the Government has to raise £25B to restore the paltry £9.9B of fiscal headroom.
