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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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.

27 May 2022 The Chancellor's Extra Measures Meaningfully Reduce Recession Risk

The £15B support package is hefty, timely and targeted; it offsets most of October’s £24B energy bill rise.

The extra cash likely will lift GDP by 0.7% in the second half of this year; this matters for monetary policy.

Strikes will become more common over the coming months, but won’t tip the balance towards recession.

Samuel Tombs (UK Economist)U.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.

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.

11 Apr 2022 Rising Mortgage Rates will Soon Call Time on Rapid House Price Gains

The two-year fixed 75% LTV mortgage rate leapt by 35bp to 2.11% in March; it is set to rise to 2.7% by Q4. 

The current tight spread between mortgage rates and risk-free rates is unsustainable; deposit rates will rise too. 

Most refinancers will cope, but the rise in new rates will be severe enough to slow house price growth. 

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.

1 Apr 2022 Don't Mistake the Swift Recovery in GDP for Private Sector Strength

  • GDP has returned to its pre-recession level faster than after the four previous downturns...
  • ...But this strength reflects high government spending; "private-sector" GDP was nearly 3% below its peak.
  • Sub-par growth in households’ financial wealth adds to the list of reasons to expect little dis-saving ahead.

Samuel Tombs (UK Economist)U.K.

30 Mar 2022 Households Still Aren't Drawing on Savings, But Borrowing is Picking Up

  • Slowing money supply growth and households' continued reluctance to deplete savings are worrying signs...
  • ...But real expenditure could still rise this year if the recovery in unsecured borrowing gathers momentum.
  • Mortgage approvals have further to fall this year, but remortgaging activity should remain strong.

Samuel Tombs (UK Economist)U.K.

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

  • In one line: Sluggish money growth and continued reticence to spend savings point to a slowing recovery.

Samuel Tombs (UK Economist)U.K.

28 Mar 2022 Does the Plunge in Confidence Signal an Imminent Recession?

  • A recession has ensued on four of the five past times when consumers' confidence is as low as it is currently.
  • The outlook for households' real disposable income is ghastly; we now expect a 2.5% y/y drop in 2022...
  • ...But if employment keeps rising, people should be will- ing to draw on savings to maintain their real spending.

Samuel Tombs (UK Economist)U.K.

24 Mar 2022 Incomes Still Set to be Pummelled, Despite Last-Minute Tax Changes

  • Tax and benefit changes will lop 1.3% off disposable incomes in 2022-23, despite Mr. Sunak's new tax cuts.
  • The Chancellor could have been bolder; he has more headroom against his fiscal targets than in October.
  • Don't bank on extra pre-election tax cuts; the OBR is too upbeat on households' spending and productivity.

Samuel Tombs and Gabriella DickensU.K.

17 Mar 2022 The Next Election is too Distant for a Very Stimulative Spring Statement

  • We expect the OBR to revise up its "pre-measures"2022/23 public borrowing forecast by £3B to £86B...
  • ...But Mr. Sunak's headroom in meeting his three-year ahead rules will not decline; inflation will ease in time.
  • The Chancellor, however, will want to preserve this headroom to cut taxes just before the next election.

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.

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