Pantheon Publications
Below is a list of our Publications for the last 6 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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Samuel Tombs
- Lingering votes to hike Bank Rate distract from most members’ endorsement of rate cuts this year...
- ...Two-year-ahead inflation is forecast nearer 2% under market rates than constant rates; upside skew has gone.
- We still expect the first 25bp cut to come in May, but the risks remain tilted towards a later commencement.
Samuel TombsUK
- New population estimates will likely raise the Chancellor’s room for tax cuts by £5B-to-£10B.
- The ONS has raised its forecast for growth in the working age population to 1.0% y/y over 2023-2029, from 0.6%.
- We think the OBR will respond by lifting its forecast for year-over-year growth in potential GDP by about 0.1pp.
Samuel TombsUK
- In one line: Households won’t stay this cautious for long.
Samuel TombsUK
- The pick-up in liquid assets despite meagre net borrowing implies households chose to save more in late 2023.
- Savings in real terms might still be below trend, but they are better distributed among households than a year ago.
- Lower mortgage rates have triggered only a small rise in approvals to date, but they will continue to recover in Q1.
Samuel TombsUK
- Energy’s weight in the CPI will likely decline in 2024, limiting the impact of falling prices on the headline rate.
- On net, weight changes will have a downward influence on the headline rate of inflation in January of about 8bp...
- ...But will then raise the path from April, albeit by no more than 20bp in any one month in 2024.
Samuel TombsUK
- People’s optimism in their personal financial outlook recovered in January to its long-run average.
- Confidence isn’t always a reliable spending bellwether, though there’s little reason to expect it to mislead now.
- Governments, however, don’t always get the credit for improving economies, as the Tories discovered in 1997.
Samuel TombsUK
CPI INFLATION WILL BE BACK TO 2.0% BY APRIL...
- ...BUT THE MPC WON’T RETURN RATES TO NEUTRAL RAPIDLY
Samuel TombsUK
- The MPC will slash its forecast for CPI inflation in 2024 after encouraging recent data and natural gas price falls.
- This revision will persuade the hawks to join the majority, but concerns about the medium-term outlook will linger.
- The MPC will try to counter market pricing for swift rate cuts by forecasting above-2% inflation two-years ahead.
Samuel TombsUK
PRICES HAVE NEARLY STABILISED; EXPECT A 5% RISE IN 2024...
- ...AS REAL INCOMES RISE & MORTGAGE RATES KEEP FALLING
Samuel TombsUK
- Public borrowing is on course to undershoot the OBR’s forecast for 2023/24 by about £5B.
- ‘Fiscal headroom’ is a distraction; Mr. Hunt will cut taxes as much as he can without jeopardising MPC rate cuts.
- We expect Budget tax cuts of £20B in 2024/25, but some people might save the windfall, fearing tax hikes soon.
Samuel TombsUK
- In one line: Falling interest payments create scope for tax cuts which the gilt market can tolerate.
Samuel TombsUK
- Vacancies are falling and redundancies are grinding higher; still no big shifts, but February is a key month.
- The OBR’s medium-term RPI inflation forecast is too low; a reappraisal would limit the rise in fiscal headroom.
- Markets’ willingness to absorb extra issuance is the main constraint on tax cuts; Mr. Hunt won’t push it too far.
Samuel TombsUK
- Retail sales fell by 0.9% q/q in Q4, but spending on services fared better; total spending likely fell only slightly.
- We judge households have finished re-accumulating the savings buffer they lost in 2022...
- ...So brisk growth in real disposable income this year should filter through to spending; the MPC won't panic.
Samuel TombsUK
- In one line: Slowing trend in the all-items index maintained, despite December’s rebound.
Samuel TombsGlobal
- In one line: Slowing trend in the all-items index maintained, despite December’s rebound.
Samuel TombsUK
- Three-month-on-three-month annualised growth in the all-items CPI slowed to just 1.4% in December...
- ...and to 2.2% for the core CPI; both headline and service inflation have undershot the MPC's forecast.
- The combination of falling energy prices and flat goods prices points to a 2% headline rate by April.
Samuel TombsUK
- In one line: The recent slowdown in wage growth looks real, but the MPC will remain anxious about the near-term outlook.
Samuel TombsUK
- The autumn slowdown in wage growth looks real; revisions after the second estimate tend to be small...
- ...But surveys point to a near-term re-acceleration, and the NLW hike looks set to have some bite.
- The unemployment rate is rising slowly; the MPC can’t be confident it is already above or near its equilibrium.
Samuel TombsUK
- Investors now attach a small probability to the MPC cutting Bank Rate by 50bp at one of its meetings.
- Almost one-third of Bank Rate cuts have been larger than 25bp, but the odds are low this year.
- Markets aren’t stressed, recession risks are easing and the MPC would prefer sub-2% to above-target inflation.
Samuel TombsUK
- GDP is on course to drop marginally in Q4, despite the rebound in November...
- ...The composite PMI picked up in December, but the retail, construction and health sectors all likely struggled.
- A recovery, however, should take hold soon; we look for 0.7% year-over-year growth in GDP in 2024.
Samuel TombsUK
