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.

ONS

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.

13 Sept 2022 UK Monitor Q3 GDP Set to be Unchanged from Q2, Undershooting the MPC's forecast

  • June's 0.2% month-to-month rise in GDP was due to the unwinding of the Jubilee hit; the trend is flat.
  • We’re pencilling-in a 0.2pp hit to September GDP from the extra public holiday, but can’t rule out a bigger fall.
  • Even excluding the impact of the Queen’s funeral, Q3 GDP looks set to undershoot the MPC’s forecast.

Samuel Tombs (UK Economist)U.K.

12 Sept 2022 UK Monitor Labour Market and Retail Sales Data to Persuade the MPC to be Cautious

  • Business surveys and vacancy data point to another negligible rise in payroll employees in August.
  • Wage growth likely remained slightly too strong for the MPC, but probably didn't gain more momentum.
  • BRC data point to a below-consensus fall in retail sales in August; the MPC won't up the hiking pace.

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.

8 Sept 2022 UK Monitor August's CPI Report will Temper Bets on a 75bp Rate Hike

  • CPI inflation likely fell to 9.9% in August, from 10.1% in
    July, returning to the level forecast by the MPC.
  • A slump in motor fuel CPI inflation likely dominated the further pick-up in food inflation.
  • BRC data show the pace of core goods price rises eased in August; July's large jump in rents won't be repeated.

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.

6 Sept 2022 UK Monitor How will Energy Price Interventions Impact the Inflation Outlook?

  • Ms. Truss has been tight-lipped about her plans, but a
    trade body plan to freeze prices is gaining traction.
  • If implemented, CPI inflation will return to the 2% target in 2023, easing the pressure for further big rate hikes.
  • Firms need help too, though we think Ms. Truss will cut business rates and provide grants, not reduce VAT.

Samuel Tombs (UK Economist)U.K.

26 Aug 2022 UK Monitor It's Not all Bad News on the Inflation Front

We expect Ofgem to announce today that the default tariff cap will increase by 80% in October.

This will boost CPI inflation by 4pp, assuming the ONS treats the government's grant as a fiscal transfer.

Core goods inflation, however, is set to fall sharply this winter; manufacturers and retailers have excess stock.

Samuel Tombs (UK Economist)U.K.

18 Aug 2022 UK Monitor The Pace of Core Price Rises will Slow Soon, Broadening the MPC's Options

A jump in food prices was the main driver of July’s rise in CPI inflation, and the overshoot of the MPC’s forecast.

The core CPI continued to rise quickly, but recent falls in commodity prices point to slower increases ahead.

Lower petrol prices will mean CPI inflation undershoots the MPC’s forecast in August; a 25bp hike is on the table.

Samuel Tombs (UK Economist)U.K.

16 Aug 2022 UK Monitor A Growing Trade Deficit will Increase Reliance on the Kindness of Strangers

The trade deficit has hit a record share of GDP over the last two quarters, but it will only get worse.

Goods imports will fall, as firms now have excess stock, but the value of energy imports will surge this winter.

The U.K.'s shortfall in exports relative to 2018 remains the largest in the G7; Brexit is largely to blame.

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.

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.

2 Aug 2022 UK Monitor Forecast Review: Fiscal Policy and Lower Saving Likely to Avert Recession

We have revised up our forecast for Q4 CPI inflation by 1.0pp since early July; energy prices have surged again.

But we have revised down our forecast for the level of GDP by only 0.5pp in Q4; fiscal policy will respond.

People also have shown more willingness to deplete savings; we still expect a recession to be narrowly avoided.

Samuel Tombs (UK Economist)U.K.

1 Aug 2022 UK Monitor Will a Household Saving Drawdown Keep a Winter Recession at Bay?

Households saved much less and borrowed more in Q2; real spending, therefore, likely was unchanged from Q1.

On paper, households have ample scope to reduce their saving rate further, but we see several constraints.

Some already have depleted savings, credit conditions are tightening, and deleveraging will be more attractive.

Samuel Tombs (UK Economist)U.K.

18 July 2022 Food and Energy Inflation Likely Drove Up the Headline Rate in June

We think that CPI inflation leapt to 9.4% in June, from 9.1% in May, exceeding the MPC’s 9.1% forecast. 

But the upside surprise will be due to a massive rise in motor fuel prices, and another increase in food inflation. 

Core inflation likely fell to 5.8%, from 5.9% in May; June 2021’s surge in goods prices likely wasn’t repeated. 

Samuel Tombs (UK Economist)U.K.

15 July 2022 Sterling is Vulnerable, Due to the Colossal Trade Deficit

The trade deficit remained extremely large by past standards in May, driven by a surge in imports.

We expect the deficit to remain huge over the rest of the year; it is on track to be the biggest since the 70s.

Tory candidates tax pledges would have to be very large in order to alter the economic outlook materially.

Gabriella DickensU.K.

14 July 2022 We Still Expect a Contraction in GDP in Q2, Despite the Sharp Rise in May

May’s rise in GDP was driven by a surge in doctor appointments-

really-and a jump in manufacturing output.

Consumer services firms struggled and will remain under pressure as households’ real incomes fell further.

June’s extra bank holiday also will dampen Q2 GDP, we expect a quarter-on-quarter contraction of 0.3%.

Gabriella DickensU.K.

11 July 2022 GDP Likely Failed to Rebound in May after April's Drop

We think GDP held steady in May, setting up a much larger quarterly drop in Q2 than the MPC expects.

The ONS will adjust for the extra working day due to the movement of the usual late May public holiday to June.

Momentum in business services likely was offset by falls in output in the retail and hospitality sectors.

Samuel Tombs (UK Economist)U.K.

30 June 2022 Services Inflation is High Only Due to Energy Price Rises and Tax Changes

Rising energy prices likely accounted for 1.6 percentage points of May's 4.9% rate of services CPI inflation.

While the jump in the VAT rate for the hospitality and recreation sector likely has lifted it by a further 0.6pp.

Underlying services inflation, therefore, only just exceeds its 2.5% average rate in the second half of the 2010s.

Samuel Tombs (UK Economist)U.K.

23 June 2022 Core CPI inflation Already has Peaked and will Fall Rapidly in Early 2023

Core CPI inflation declined to 5.9% in May, from 6.2% in April, and will fall further in June.

Retailers are shrinking their margins, rather than passing on surging producer prices fully to consumers.

Faltering demand will constrain future core price rises, enabling the MPC to stop its hiking cycle this year.

Samuel Tombs (UK Economist)U.K.

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