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.

consumer

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.

UK Datanote: U.K. Consumer Prices, June 2022

  • In one line:  Declining core CPI inflation will ease the MPC’s concerns that the economy is overheating.

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.

13 July 2022 Expect More Signs of a Loosening Labour Market Next Week

We think employment grew at a steady 0.5% threemonth-on-three-month pace in May.

But expect even faster growth in the workforce to mean that the unemployment rate edged up again.

Surveys suggest wage growth had no more momentum in May than in prior months.

Gabriella DickensU.K.

4 July 2022 Households' Didn't Reduce their Saving Enough in Q2 to Stop Spending Falling

Households have not saved sufficiently less in Q2 to offset the hit to spending from the huge real income drop.

The high level of ad-hoc mortgage and unsecured debt repayments shows households remain cautious.

Households usually slash their saving rate when total financial wealth is growing quickly; it is barely rising now.

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.

UK Datanote: U.K. Consumer Prices, May 2022

  • In one line:  Core inflation already has peaked and is undershooting the MPC’s forecast.

Samuel Tombs (UK Economist)U.K.

22 June 2022 New Estimates of the Distribution of Households' "Excess Savings"

Estimates of the distribution of savings can be derived by reconciling data from a few ONS surveys.

Our calculations suggest households in the top 10% of the income distribution hold 25% of the excess savings.

The current wave of rail strikes do not meaningfully increase the risk of a recession this year.

Samuel Tombs (UK Economist)U.K.

20 June 2022 CPI Inflation Likely Undershot the MPC's Forecast Again in May

We think the headline rate of CPI inflation was stable at 9.0% in May, despite rising food and fuel inflation. 

Core CPI inflation likely fell; data suggest the rise in goods prices didn’t match the big jump a year ago. 

Retailers are starting to accept a squeeze on the margins, while used car prices are continuing to fall. 

Samuel Tombs (UK Economist)U.K.

14 June 2022 GDP Set to Contract by about 0.7% Q/Q in Q2, after April's Weak Print

April's fall in GDP was driven by Covid spending, but flat private sector GDP caused the downside surprise.

Consumer services firms likely increasingly struggled during Q2, as households' real incomes fell further.

June's extra bank holiday also will dampen Q2 GDP; the MPC has to lower its forecast for 0.1% q/q growth.

Samuel Tombs (UK Economist)U.K.

10 June 2022 April GDP Data Will Confirm the Recovery has Stalled

We look for a mere 0.1% month-to-month rise in GDP in April, only just reversing the prior month's fall.

While output in the manufacturing and distribution sectors probably rebounded.

The consumer services sector was hit by the real income squeeze, and Covid-related spending plunged.

Samuel Tombs (UK Economist)U.K.

1 June 2022 Real Spending Looks Set to Drop as Households Continue to Save More

Households still were unwilling to use their excess savings in April, despite the sharp drop in real incomes.

With excess savings equal to £186B and consumer credit £23B below its peak, consumers still can spend.

But low confidence, the unequal distribution of savings and falling incomes suggests expenditure will dip in Q2.

Gabriella DickensU.K.

23 May 2022 Don't Infer Recession from the Record Low GfK Consumer Confidence Index

People are more likely to drain savings when they are glum due to inflation than when they fear redundancy.

April's recovery in retail sales suggests that households are prepared to defend their current real spending.

Recession risks likely will be further minimised by extra support from the government in the autumn.

Samuel Tombs (UK Economist)U.K.

19 May 2022 The Outlook for CPI Inflation Doesn't Warrant Rapid Rate Hikes

Higher energy prices and tax rises pushed up the headline rate of CPI inflation to a 40-year high in April.

But there were encouraging signs that retailers are starting to absorb some of the surge in producer prices.

Inflation will ease over the summer as base effects kick in and the real income squeeze inhibits services price rises.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Consumer Prices, April 2022

  • In one line:  Jumping broadly as anticipated; expect the headline rate to ease slightly over the coming months.

Samuel Tombs (UK Economist)U.K.

13 May 2022 Brisk Quarterly GDP Growth Masks a Slowdown during Q1

Q1 GDP grew faster in the U.K. than overseas because consumers were shielded from higher energy prices.

Monthly data show growth slowed during Q1; falling retail sales were more than just a consumer rotation.

Falling real incomes, declining health spending and the extra bank holiday will reduce GDP in Q2.

Samuel Tombs (UK Economist)U.K.

5 May 2022 Households are Showing Little Sign of Riding out the Real Income Shock

Households must save less—or borrow more—to the tune of £9B in Q2, in order for real spending not to fall. 

That is possible, given that "excess savings" are £186B and consumer credit is £25B below its peak.

But people didn't draw on savings in March and still are reluctant to borrow, so GDP looks set to dip in Q2.

Samuel Tombs (UK Economist)U.K.

3 May 2022 Forecast Review, The Near-Term Outlook for GDP Has Worsened

The near-term outlook for households' real disposable income looks bleak; we still expect GDP to drop in Q2.

A recession, however, isn't our base case; people have ample scope to draw on savings and to borrow more.

We now Bank Rate to top out at 1.25% this year, not 1.00%, but still think markets have lost the plot.

Samuel Tombs (UK Economist)U.K.

22 Apr 2022 Which of the Conflicting Indicators of Employment Should Be Believed?

The upward trend in the PAYE measure of employees is more plausible than the flat trend presented by the LFS.

Very strong survey indicators might reflect rising average hours and likely are insensitive to rising quits.

Employment growth looks set to slow from Q2, due to the rise in NICs and weaker demand.

Gabriella DickensU.K.

21 Apr 2022 Stockbuilding will Swing to Depressing GDP Growth Shortly

Firms want to hold more stocks than in the 2010s, but now are accumulating them at a slower pace.

GDP growth depends on the rate of change in inventories, so the deceleration will depress growth.

Futures prices historically have been a better guide to energy prices than assuming they don't change.

Samuel Tombs (UK Economist)U.K.

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