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

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UK Datanote: U.K. Money & Credit, October 2022

  • In one line: Still no sign of households using savings to support their real expenditure.

Gabriella DickensU.K.

UK Datanote: U.K. Money & Credit, September 2022

  • In one line: Households are acting with caution when deciding to save less and borrow more. 

Gabriella DickensU.K.

UK Datanote: U.K. Money & Credit, August 2022

  • In one line: The pick-up in mortgage approvals will be short-lived.

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.

1 Sept 2022 UK Monitor Capex will Continue to Recover, Despite the Risk of Recession

  • Business investment rose again in Q2, as key uncertainties faded and supply constraints began to ease.
  • We expect a further rebound in H2; balance sheets are strong and investment intentions still are high.
  • But we doubt capex will return to its pre-Brexit share of GDP; the U.K is a less desirable place to invest.

Gabriella DickensU.K.

31 Aug 2022 UK Monitor Government Support Needed to Maintain Real Consumption

  • Households continued to save less and borrow more in July, in order to maintain consumption.
  • Looking ahead, though, people lack the fire-power to withstand future income shocks.
  • We now think a winter recession will be avoided only if the government beefs up financial support massively.

Gabriella DickensU.K.

UK Datanote: U.K. Money & Credit, July 2022

  • In one line: Households still are saving less and borrowing more, but this alone won’t prevent a recession this winter.

Samuel Tombs (UK Economist)U.K.

3 Aug 2022 UK Monitor Surging Mortgage Rates Point to an Outright Drop in House Prices

House purchase demand is falling quickly in response to the jump in mortgage rates and drop in real incomes.

New mortgage rates look set to rise further in Q3, greatly weighing on approvals.

A contraction in supply, however, will prevent a slump in prices; we still forecast a modest 2% decline in H2 2022.

Gabriella DickensU.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.

UK Datanote: U.K. Money & Credit, June 2022

  • In one line: Households are now saving less and borrowing more in order to sustain their real consumption.

Samuel Tombs (UK Economist)U.K.

19 July 2022 The MPC Won't be Distracted by Tax Cut Proposals for Now

The tax cut plans of Tory leadership contenders should be treated with a pinch of salt, given past experience.

Tax cuts won't lift GDP, if they are financed partially by spending reductions; the latter have a higher multiplier.

We doubt that even Ms. Truss would take away the BoE's independence.

Samuel Tombs (UK Economist)U.K.

12 July 2022 Business Investment Still Looks Set to Rise, Reducing Recession Risks

Business investment fell in Q1, partly due to supply disruption preventing orders being fulfilled.

But supply shortages are easing, and with Brexit and Covid uncertainty dissipating, capex should rebound.

A renewed rebound in business investment will support GDP growth in the second half of the year.

Gabriella DickensU.K.

5 July 2022 Forecast Review: The Inflation Roller Coaster has Become Even Steeper

The MPC and consensus still aren't downbeat enough on Q2 GDP; we look for a 0.7% quarter-on-quarter drop.

CPI inflation now looks set to approach 11% in October, driven by further huge rises in food and energy prices...

...But wage growth and inflation expectations haven’t risen, while producer price inflation now is set to plunge.

Samuel Tombs (UK Economist)U.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.

UK Datanote: U.K. Money & Credit, May 2022

  • In one line: Households’ cautious saving and borrowing behaviour points to lower real expenditure in Q2.

Samuel Tombs (UK Economist)U.K.

27 June 2022 The Nadir in Retail Sales is Near, but Growth will be Lacklustre in H2

Retail sales volumes continued to decline in May in response to rapidly rising prices. 

Consumer confidence deteriorated further in June, but retail sales should start to recover slowly soon... 

Real disposable incomes will rise in Q3, thanks to Mr. Sunak’s grants; dis-saving and borrowing will help too. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Money & Credit, April 2022

  • In one line: Households still appear unwilling to draw on their savings to support spending 

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.

30 May 2022 How will the MPC Respond to the Chancellor's Support Measures?

Mr. Sunak's measures will boost households' nominal incomes in H2 by 2% and nominal GDP by about 0.7%.

The medium-term impact, however, will be small, and the package is so timely the MPC can't feasibly offset it.

So the outlook for Bank Rate hasn't changed radically; we now expect it to rise to 1.50%, not 1.25%, this year.

Samuel Tombs (UK Economist)U.K.

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