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.

June

10 Oct 2022 UK Monitor August GDP and Labour Market Data to Point to Stagnation

  • We look for a small 0.1% month-to-month rise in GDP
    in August; that’s probably the last rise for this year.
  • The single-month measure of employment fell in June and July, but surveys signal modest growth in August.
  • Recent wage indicators have painted a mixed picture; expect year-over-year growth to rise only modestly.

Samuel Tombs (UK Economist)U.K.

16 Sept 2022 UK Monitor The Improved Inflation Outlook Implies the MPC will Stick to a 50bp Hike

  • We think the MPC will raise Bank Rate by 50bp next week, despite other central banks rushing ahead...
  • ...Q3 GDP is set to undershoot the MPC’s latest forecast, while the inflation outlook has improved greatly.
  • Proposed tax cuts are too small to move the inflation needle, and likely will be partly funded by spending cuts.

Samuel Tombs (UK Economist)U.K.

14 Sept 2022 UK Monitor Wage Growth Remains too High for the MPC, But that will Change in 2023

  • Employment has stopped rising, but labour market slack hasn't accumulated, due to increasing inactivity.
  • We expect labour demand to remain flat but the workforce to grow, as immigration and participation recover.
  • For now, wage growth is too hot for the MPC, but building slack and falling CPI inflation will slow it in 2023.

Samuel Tombs (UK Economist)U.K.

9 Sept 2022 UK Monitor A Recession Now Looks Unlikely, following Bold Energy Price Action

  • The average household will spend less on energy over the next six months than during the last six.
  • So a winter recession now looks unlikely, and the MPC can return to focussing on core CPI inflation.
  • Fiscal policy will stabilise demand, not lift it; job market slack still looks set to emerge, limiting rate hikes.

Samuel Tombs (UK Economist)U.K.

7 Sept 2022 UK Monitor July GDP to Show the Economy has Slowed, but is Not in Recession Yet

  • We look for a modest 0.3% month-to-month rise in July
    GDP, leaving it only 0.1% up from three months earlier.
  • The composite PMI has pointed to stronger growth, but it excludes the distribution and health sectors.
  • Revised GDP estimates later this month likely will show that economic activity still is below its pre-Covid peak.

Samuel Tombs (UK Economist)U.K.

2 Sept 2022 UK Monitor The Inventory of Unsold Properties will Rise Over the Next Year

  • Low unemployment means few homeowners will be forced to sell up, and construction already is declining.
  • Landlords, however, likely will struggle to raise rents in line with the jump in their mortgage payments.
  • We expect the stock of homes on the market, therefore, to rise over the next year, weighing on house prices.

Gabriella DickensU.K.

24 Aug 2022 UK Monitor Flash PMIs Suggest the Economy is Stagnant at Best

August’s PMIs suggest the recovery has petered out, with the manufacturing sector heading into recession.

Employment growth also has come off the boil, while price pressures mostly have continued to ease.

All this suggests the MPC have room to act with caution; a 50bp hike is not the done deal assumed by markets.

Samuel Tombs (UK Economist)U.K.

19 Aug 2022 UK Monitor The U.K.'s High Inflation is Due to Fiscal Policy, Not an Overheating Economy

The U.K.'s relatively high rate of CPI inflation is largely due to government policies.

The energy price shock has been softened by grants, not tax cuts; VAT and NICs hikes have also played a role.

Higher core goods inflation than in the Eurozone is largely due to Brexit, not stronger underlying demand.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Official House Price Index, June

  • In one line:  Still too soon to see the damage from higher mortgage rates.

Gabriella DickensU.K.

17 Aug 2022 UK Monitor Labour Market Slack will Continue to Build, Easing Wage Pressures

Growth in employment in the three months to June undershot the consensus by the most in nearly two years.

The workforce, by contrast, is finally picking up, assisted by a recovery in immigration, which will be maintained.

Vacancy and payroll employee data indicate labour demand is stagnating; unemployment will rise further.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Labour Market Data, June/July 2022

  • In one line: Labour supply is bouncing back, just as demand stops rising.

Samuel Tombs (UK Economist)U.K.

15 Aug 2022 UK Monitor Q2 GDP Withstood the Government Spending and Jubilee Drags Well

Q2 GDP would have held steady without the Jubilee and risen by 0.9% q/q if Covid spending hadn't plunged.

The 0.2% q/q drop in households' real expenditure was a good result, given the massive fall in real incomes.

A recession isn't inevitable, provided fiscal support is increased substantially and households draw on savings.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. International Trade, June 2022

  • In one line: Another massive deficit, but the worst is yet to come.

Samuel Tombs (UK Economist)U.K.

12 Aug 2022 UK Monitor CPI Inflation Likely Neared 10% in July, in line with the MPC's Forecast

CPI inflation likely jumped to 9.9% in July, from 9.4% in June, led by rises in motor fuel and food CPI inflation.

Eurozone data and the BRC's figures both point to a renewed rise in core goods CPI inflation in July.

Surveys show services prices have continued to rise at an above-average rate, albeit less quickly than in Q2.

Samuel Tombs (UK Economist)U.K.

11 Aug 2022 UK Monitor June Official Data to Confirm the Labour Market No Longer is Tightening

PAYE data, vacancy figures and business surveys all suggest employment growth slowed in June and July.

Labour supply, however, is picking up; the unemployment rate likely was marginally higher in Q2 than in Q1.

Wages likely continued to rise in June at a rate inconsistent with the inflation target, but probably didn't speed up.

Samuel Tombs (UK Economist)U.K.

9 Aug 2022 UK Monitor The Unemployment Rate will Rise Sooner than the MPC Expects

The MPC currently expects the unemployment rate to remain well below 4% until Q3 2023...

...But timely indicators suggest demand for labour already is cooling, just as supply is starting to recover.

We expect the unemployment rate to rise above 4% before year-end, keeping a lid on wages and rate hikes.

Samuel Tombs (UK Economist)U.K.

8 Aug 2022 UK Monitor Jubilee-Linked Drop in June GDP to Obscure the Economy's Pulse

We think that GDP dropped by 1.6% month-to-month in June, almost entirely due to the extra public holiday.

GDP fell by 2.2% in 2002 and 1.7% in 2012; changes in the economy's composition since then won't help much.

Our forecast implies GDP fell by 0.3% q/q in Q2, but this probably won't mark the start of a recession.

Samuel Tombs (UK Economist)U.K.

5 Aug 2022 UK Monitor The MPC's New Forecasts Challenge Markets' View of Much Higher Rates

The MPC's forecasts signal clearly that markets' medium-term expectations for Bank Rate are too high.

But concerns about persistence in domestic price setting, and looser fiscal policy, will spur further hikes.

We now expect the MPC to raise Bank Rate to 2.00% in September and 2.25% in November, and then to pause.

Samuel Tombs (UK Economist)U.K.

4 Aug 2022 UK Monitor The Headwind from Mortgage Refinancing is Set to Intensify

The effective interest rate on the stock of mortgages rose by only 11bp in H1, but will jump by 30bp in H2...

...and by a further 30bp over the course of 2023, if markets are right about the path for risk-free rates.

Firms still are very exposed to movements in short- rates; the transmission mechanism remains powerful.

Samuel Tombs (UK Economist)U.K.

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