Pantheon Macroeconomics

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U.K. Publications

Below is a list of our U.K. 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

Please use the filters on the right to search for a specific date or topic.

December

UK Datanote: U.K. Public Finances, December 2021

  • In one line: Interest payments are surging, but the Chancellor still has scope to ease the looming squeeze on households’ incomes.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Retail Sales, December 2021

  • In one line: Early gift-buying largely to blame, but the outlook is overcast. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. RICS Residential Market Survey, December 2021

  • In one line: The start of a gradual slowdown for house price growth. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Labour Market Data, November/December 2021

  • In one line: Employment still rising, despite the end of furlough and the Omicron hit. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. BRC Retail Sales Monitor, December 2021

  • In one line: Payback for earlier than usual Christmas gift buying.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Markit/CIPS Construction Survey, December 2021

  • In one line: Supply shortages are continuing to ease, bearing down on input price inflation. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Markit/CIPS Services Survey, December 2021

  • In one line: Omicron weighed heavily on consumer services in December.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Car Registrations, December 2021

  • In one line: Recovering, but still a long way to go. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Markit/CIPS Manufacturing Survey, December 2021

  • In one line: Supply chains improved modestly, but Brexit and Omicron will undo recent progress in Q1.

Samuel Tombs (UK Economist)U.K.

PM Datanote: U.K. CBI Distributive Trades Survey, December

PM Datanote: U.K. CBI Distributive Trades Survey, December

In one line: Omicron and earlier-than-usual Christmas shopping are weighing on sales. 

The CBI’s reported sales balance plunged to +8 in December, from +39 in November, well below the consensus, +25. 

The sharp drop in the net balance of retailers reporting that sales were higher than a year ago suggests that annual growth in retail sales has slowed to a crawl. The reported sales balance was at its lowest level since March. And the sales-for-the-time-of-year balance—which has a better relationship with the official data—fell to -2 in December, from +35 in November.  Admittedly, other measures of consumers’ spending have been more upbeat in December. The Bank of England’s CHAPS data, for instance, rose by 12% in the first nine days of the month, compared to November’s average level. Note, however, that the series is not seasonally adjusted. Given that retail sales usually are 15% higher in December than in November, total spending might not be rising at all. 

Nonetheless, we think that retail sales should be relatively immune to the impact of the Omicron variant, particularly if consumers shift spending away from services venues. After all, employment growth has remained strong in the wake of the withdrawal of the furlough scheme. And households have amassed excess savings equal to nearly 9% of GDP, which they can draw on to finance expenditure over the next year, if they become more confident again. We doubt, however, that households will go on a spending spree, either. GfK’s measure of consumer confidence edged down to -15 in December, from -14 in November, well below its long-run average, -9.  And as well as the emergence of the Omicron variant, households are facing mounting pressure on their real incomes from high CPI inflation. Real incomes will be hit by the increase in National Insurance contributions in April and by soaring CPI inflation, which looks set to increase to around 6% on the back of a huge increase in energy prices. Growth in employment also will slow as businesses too are hit by higher NICs and struggle to utilise the staff they took back from furlough in October.  On balance, we expect retail sales in H1 next year merely to match Q4’s level. 

The chart shows that annual growth in retail sales probably slowed to a crawl in December as consumers already had done a lot of their Christmas shopping in October and November, and the Omicron variant persuaded people to retreat to their homes. 

Samuel Tombs (UK Economist)U.K.

17 Dec 2021 The MPC will Give the Economy Breathing Space Before Hiking Again

Markets now expect the MPC to hike Bank Rate to 0.50% in February, following today's surprise hike.

Most members, however, thought the decision was "finely balanced" and see a "modest" tightening ahead.

Omicron won't just have short-term effects if the MPC hikes again and pushes firms over the edge.

Samuel Tombs and Gabriella DickensU.K.

16 Dec 2021 Subdued Services Inflation Gives the MPC Time to Wait for Omicron

November's 5.1% CPI inflation rate was 0.6pp above the forecast made by the MPC only last month...

...But high inflation is due to surging energy and goods prices; underlying services inflation remains subdued.

We expect the headline rate to peak at 6.0% in April, but then to fall sharply, slipping below-target in 2023.

Samuel Tombs and Gabriella DickensU.K.

15 Dec 2021 Labour Market to Warrant Gradual Rate Hikes, Once Omicron Wanes

The unemployment rate continued to fall in October, despite the end of the furlough scheme.
Some full-time workers have become part-timers post-furlough, but they don't seem to want more hours.
Wage growth, however, slowed to a below-inflation rate in October; the real wage squeeze will get worse.

Samuel Tombs and Gabriella DickensU.K.

14 Dec 2021 Sterling to Continue to Slide in 2022, Hurt by the U.K.'s Covid Sensitivity

Trade-weighted sterling has fallen by about 2% since late October; bets on a further drop have intensified.
The U.K. economy is more Covid sensitive than most; the downside risk to rate expectations is greater.
Investors next year increasingly will price-in the risks of a messy outcome to the next general election.

Samuel Tombs and Gabriella DickensU.K.

7 Dec 2021 Real-Time Data Show Clear Hit to Services Firms from Omicron

  • Omicron fears already have led people to travel and visit restaurants, shops and cinemas less often.
  • Booster jabs are containing hospital admissions, but people still have good reasons to avoid being infected.
  • While boosters and school holidays will weigh on cases, Omicron and Christmas festivities will keep R>1.

Samuel Tombs (UK Economist)U.K.

23 Nov 2021 MPC Members are Keeping their Options Open, No Matter the Data

  • MPC members Bailey and Pill are sitting on the fence, despite last week's upside data surprises.
  • In a weekend paper interview, the Governor highlighted the public sector's role in driving the recovery.
  • We put the odds of a December rate hike at 60%, well below the 80-to-90% range priced by markets.

Samuel Tombs (UK Economist)U.K.

25 Oct 2021 Where Does Last Week's Data Deluge Leave the MPC?

  • Markets are pricing-in a 65bp rise in Bank Rate by March and expect the first hike to come next week...
  • ...But falling consumer confidence, low pay settlements and rising Covid cases strengthen the case for patience.
  • November is "live", but markets' conviction is too strong; potential swing voters on the MPC have been very

Samuel Tombs (UK Economist)U.K.

8 Sept 2021 The MPC Won't Hike Bank Rate Just After a Big Rise in NICs

  • Markets still expect the MPC to hike rates in Q2 2022, despite surprise plans to lift national insurance in April.
  • The tax hike will defer a full recovery in households' spending to the second half of next year.
  • The plans imply the Treasury does not expect the OBR to turn upbeat on the medium-term economic outlook.

Samuel Tombs (UK Economist)U.K.

12 Aug 2021 Will Car Sales Remain at Q2's Elevated Level?

Car demand surged in Q2, as easing Covid-19 restrictions boosted consumers' confidence.
But shortages of key components have limited the supply of new cars; used car sales have surged.
Used car sales look set to remain elevated this year, pushing up prices.

Samuel Tombs (UK Economist)U.K.

11 Aug 2021 Will Sterling Still be 2021's Best Performing Currency by Year End?

By the autumn, vaccination rates no longer will be higher in the U.K. than other advanced economies.
The chances of U.S. and U.K. rates rising in lockstep are remote; the U.S. recovery is far more advanced.
U.K. political risks are low now, but next year investors will start to weigh the risks from the 2024 election.

Samuel Tombs (UK Economist)U.K.

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