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.

covid-19

20 May 2022 The Start of a More Protracted Slowdown for House Price Growth?

Year-over-year growth in the official measure of house prices fell to 9.8% in March, from 11.3% in February.

Surging mortgage rates and falling real disposable incomes will cause house price growth to slow further.

We expect house prices to level off in H2, leaving the year-over-year rate at around 5% at the end of 2022.

Gabriella DickensU.K.

9 May 2022 GDP Likely was Unchanged in March, Preluding a Contraction in Q2

The boost to activity from the removal of final Covid restrictions likely was offset by falling health sector output.

Higher energy prices and fresh supply chain frictions, following the war in Ukraine, likely hit manufacturing.

Retail sales and car sales fell, while the recovery in the hospitality sector appears to have topped out.

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.

26 Apr 2022 The PMI Turned Down in April, but is Still too Upbeat on Q2 GDP Growth

The composite PMI points to solid quarter-on-quarter GDP growth of 0.7% in Q2, despite falling in April.

The PMI, however, likely is too upbeat; it excludes government expenditure and retail sales, which are falling.

It might also be too strong when turnover is being lifted by price rises; we still expect GDP to drop in Q2.

Gabriella DickensU.K.

13 Apr 2022 A Recovery in the Workforce will Limit Wage Pressures in 2022

Employment started to rise again in the three months to February, having fallen in December and January.

The workforce should start to recover this year, reflecting a decline in inactivity and a rise in immigration.

Alongside slower labour demand growth this should mean wages continue to rise more slowly than prices.

Samuel Tombs (UK Economist)U.K.

12 Apr 2022 February's Weak GDP Growth Rate will Become the Norm

GDP rose by 0.1% m/m in February, despite a rebound in private sector activity, due to falling Covid spending.

Healthcare output will fall further, while the momentum in the private sector will slow as real incomes decline.

We look for a 0.4% quarter-on-quarter drop in GDP in Q2; the extra public holiday will add to these headwinds.

Samuel Tombs (UK Economist)U.K.

6 Apr 2022 Falling Health Sector Output Likely Caused GDP to Drop in February

Output in the consumer services sector recovered strongly in February, assisted by fading Covid fears.

...But output in the health sector likely fell considerably, due to sharp falls in Covid testing and vaccinations.

Manufacturing output was hit by a slump in car production, while building work was disrupted by storms.

Samuel Tombs (UK Economist)U.K.

4 Apr 2022 Forecast Review: Rate Expectations Look Even More Out of Kilter

  • GDP is set to fall in Q2, as Covid-related government spending declines and real incomes drop sharply.
  • Energy prices currently point to CPI inflation rising to 8.5% in April, and returning to that level in October.
  • Markets have revised up their rate expectations, mistakenly overlooking key comments in the MPC's minutes.

Samuel Tombs (UK Economist)U.K.

31 Mar 2022 Why are we the Only Forecasters Expecting GDP to Fall in Q2?

  • Most economists have overlooked the big drag on GDP growth ahead from falling Covid-related expenditure...
  • ...As well as the hit to output in June from the extra public holiday to celebrate the Queen's Diamond Jubilee.
  • We look for a 0.3% q/q decline in Q2 GDP, but a recession isn't likely; all the headwinds will ease in Q3.

Gabriella DickensU.K.

29 Mar 2022 The Momentum Behind the Recovery in Q1 won't be Sustained

  • The latest data suggest that GDP increased by 0.9% in Q1, despite the Omicron hit at the turn of the year...
  • ...But lower health spending, an extra bank holiday and falling real incomes will weigh on the recovery in Q2.
  • The MPC, therefore, likely will refrain from raising Bank Rate later this year, after a final hike to 1.00% in May.

Samuel Tombs (UK Economist)U.K.

18 Mar 2022 Markets Likely to be Caught on the Hop Again by the MPC's Dovishness

  • Markets' rate expectations fell sharply in response to the crumbling of hawkish dissent on the Committee.
  • The MPC now is more worried about the impact of high inflation on demand than on inflation expectations.
  • We continue to expect the MPC to stop hiking this year once Bank Rate has reached 1%.

Samuel Tombs (UK Economist)U.K.

15 Mar 2022 This Year's Trade Deficit will be the Largest Since the Late 1980s

  • January's record large trade deficit was not just due to erratic items; higher energy prices are partly to blame.
  • U.K. exporters also are continuing to lose market share; no reason to expect a turnaround this year.
  • Imports will continue to rise quickly, driven by higher energy prices and the recovery in outbound tourism.

Gabriella DickensU.K.

14 Mar 2022 GDP Likely to Dip in Q2, Despite Current Momentum

  • January's rebound should ensure GDP rises by nearly 1% q/q in Q1, far exceeding the MPC's expectations.
  • But Test & Trace and vaccination activities boosted GDP by 2% in January; this support soon will gone.
  • Q2 GDP also will be hit by the extra bank holiday and a sharp fall in real incomes; we look for a 0.2% q/q drop.

Samuel Tombs (UK Economist)U.K.

8 Mar 2022 GDP Likely Rose to a New High in January, Despite Omicron

  • We look for a 0.5% month-to-month rise in January GDP, well above the 0.1% consensus.
  • Retail sales and car sales jumped, while Covid afflicted sectors staged a partial recovery.
  • The hit to health sector output from falling Covid jabs and tests was offset by a jump in non-Covid activities.

Samuel Tombs (UK Economist)U.K.

UK 7 Mar 2022 Forecast Review: Brace for an 8% Double Peak in CPI Inflation

  • CPI inflation now is set to rise to 8% in April, and touch 8% again in October, due to the surge in energy prices. 
  • Low confidence implies households won't touch their savings much, so we have lowered our GDP forecast. 
  • Markets expect four more 25bp rate hikes this year, though we continue to expect only two. 

Samuel Tombs (UK Economist)U.K.

28 Feb 2022 Markets Still Overestimating the Scope for Further Rate Hikes

  • Real household disposable income is set to drop by 2.0% this year, the most since the Second World War.
  • The Chancellor likely won't come to households' res- cue; debt interest and military spending is set to jump.
  • We have nudged down our GDP forecast and now expect it to be up only 1.5% year-over-year in Q4.

Samuel Tombs (UK Economist)U.K.

17 Feb 2022 Inflation Data Bolster the Case for Rate Hikes, but not 50bp in One Go

  • January's 5.5% rate of CPI inflation only just exceeded the MPC's 5.4% forecast; the surprise was all in goods.
  • Services inflation is only slightly above its long-run average; the MPC needn't panic.
  • The headline rate likely will peak at 7.7% in April, but then fall swiftly, potentially undershooting the target in 2023.

Samuel Tombs (UK Economist)U.K.

16 Feb 2022 Labour Market Data Suggest the MPC Needn't Hike Aggressively

  • The labour market is tight on every measure, but employment growth is slowing and wages aren't soaring.
  • The first estimate of month-to-month growth in employee numbers in January was the lowest since April.
  • Wages will be supported by low unemployment, but undermined by higher taxes and slowing job moves.

Samuel Tombs (UK Economist)U.K.

11 Feb 2022 Mortgage Rates will Rise Further, Slowing the Housing Market

  • The average rate for a two-year fixed rate mortgage, with a 75% LTV ratio, likely will leap to 2.1%, from 1.6%.
  • This increase won't be a problem for most refinancers, but it will impact affordability for new homebuyers.
  • Next week's labour market data will show Q4's small drop in employment is on course to be reversed in Q1.

Samuel Tombs and Gabriella DickensU.K.

8 Feb 2022 Surging Healthcare Activities Likely Cushioned GDP in December

  • Business surveys point to substantial damage to GDP in December from Omicron; hospitality was hit hard...
  • ...But surging Test & Trace and vaccine activities likely boosted month-to-month growth in GDP by 0.7pp.
  • We look for a 0.6% month-to-month drop in GDP, which likely will not cause the MPC to blink.

Samuel Tombs (UK Economist)U.K.

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