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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24 Jan 2022 December's Drop in Retail Sales is a Blip, but the Trend is Uninspiring

  •  Retail sales were hit in December by a double whammy of earlier-than-usual gift buying and Omicron.
  • Sales, however, will be no higher in Q1 and Q2 than in Q4, given the pressure on households' real incomes.
  • Households have huge excess savings, but low confidence suggests they won't draw on them much soon.

Samuel Tombs (UK Economist)U.K.

21 Jan 2022 House Price Growth to Slow in 2022 as Mortgage Rates Rise

  • House price growth remained strong in Q4, despite the return of the SDLT threshold to £125K at the end of Q3.
  • Timely indicators, however, suggest Omicron weighed on buyer demand at the end of the year, and in January.
  • Higher mortgage rates and falling real incomes will cause house price growth to decelerate this year.

Samuel Tombs (UK Economist)U.K.

17 Jan 2022 The Recovery is Over; Now Comes the Hard Part

  • GDP surpassed its pre-Covid level in November, albeit with support from some unsustainable sources.
  • Omicron has temporarily set the economy back, but GDP should return to November's level by March.
  • Thereafter, however, GDP growth likely will be slow, due to the squeeze on households' disposable incomes.

Samuel Tombs (UK Economist)U.K.

6 Jan 2022 What Would Government Energy Price Intervention Mean for Inflation

  • The default tariff energy price cap looks set to rise by 47% in April, pushing up CPI inflation to 6.2%.
  • The rise will be larger, if suppliers are immediately compensated for acquiring failed competitors' customers.
  • Removing VAT would limit the inflation peak to 6.0%; a supplier loan scheme could have a bigger impact.

Samuel Tombs (UK Economist)U.K.

5 Jan 2022 Lower Saving Reflects Inflation Pressure, not Reviving Confidence

  • The return of monthly saving to pre-Covid levels is a sign of the real income squeeze, not surging spending.
  • The recent surge in house prices, however, is enabling refinancing homeowners to access lower interest rates.
  • Firms continued to repay external borrowing in November, but we remain upbeat on the capex outlook.

Samuel Tombs and Gabriella DickensU.K.

UK Datanote: U.K. Money & Credit, November 2021

  • In one line: Households’ saving returns to pre-Covid rates, as inflation pressures mount.

Samuel Tombs (UK Economist)U.K.

22 Dec 2021 A Falling Participation Rate Looks Set to Limit Trend Growth this Decade

  • The supply of labour has dropped over the past two years, in part due to a lower participation rate.
  • Over-50s have been a key driver, due to early retire- ment or long-term sickness following Covid-19.
  • We think the participation rate now is on a perma- nently lower path, limiting trend growth this decade.

Gabriella DickensU.K.

UK Datanote: U.K. Money & Credit, October 2021

  • In one line: Lower saving by households likely due to higher inflation and early Christmas gift buying.

Samuel Tombs (UK Economist)U.K.

30 Nov 2021 Does October's Low Saving Signal Households' Mindset has Changed?

  • Households last month saved the least and borrowed the most for consumption since the pandemic began...
  • ...People are maintaining their spending while real incomes are falling; they aren't bingeing.
  • Firms continued to repay external finance in October, but this isn't necessarily a bad sign for investment.

Samuel Tombs (UK Economist)U.K.

19 Nov 2021 Near-Real-Time Indicators Signal a Further Slowdown in Q4

  • The ONS' BIC survey suggests the recovery stalled in both October and November
  • OpenTable figures show that the boom in dining out has faded in November.
  • We expect quarter-over-quarter GDP growth to slow to 1.0% in Q4, from 1.5%, and below the consensus, 1.1%

Gabriella DickensU.K.

10 Nov 2021 Political Risks Likely will Re-Emerge as a Drag on Sterling Next Year

  • The Conservatives' poll lead has virtually disappeared; we doubt it will re-emerge next year.
  • Higher inflation and rising interest rates will keep consumers' confidence weak.
  • A hung parliament would bring to the fore Brexit and Scottish independence risks again, weakening sterling.

Samuel Tombs (UK Economist)U.K.

3 Nov 2021 Is the Outlook for Households' Incomes Brighter After the Budget?

  • Budget announcements, including the jump in National Living Wage, will support earnings growth next year...
  • ...but higher taxes and inflation suggest real take home pay will fall by 1.5%, the most since 2011.
  • This is one key reason we expect the MPC will hike Bank Rate by less than markets currently expect.

Samuel Tombs (UK Economist)U.K.

2 Nov 2021 Households won't Abandon their Cautious Mindset Anytime Soon

  • Households continued in September to save more and borrow less than they did before Covid.
  • The recovery in spending will continue only if households save less in response to falling real incomes...
  • Households did this in 2016, but are less confident now, despite having a larger precautionary buffer.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Money & Credit, September 2021

  • In one line: Households still saving more than usual; low confidence suggests caution will continue.

Samuel Tombs (UK Economist)U.K.

28 Oct 2021 A Budget with an Eye on the Next Election, not Near-Term Popularity

  • The Chancellor spent only about half of the windfall stemming from the OBR's rosier economic forecasts...
  • ...In order to build scope to cut taxes before the next election, while still meeting his new fiscal targets.
  • The OBR's new GDP forecasts are too upbeat, while its debt interest forecast is too low, but this won't matter.

Samuel Tombs and Gabriella DickensU.K.

25 Oct 2021 Where Does Last Week's Data Deluge Leave the MPC?

  • Markets are pricing-in a 65bp rise in Bank Rate by March and expect the first hike to come next week...
  • ...But falling consumer confidence, low pay settlements and rising Covid cases strengthen the case for patience.
  • November is "live", but markets' conviction is too strong; potential swing voters on the MPC have been very

Samuel Tombs (UK Economist)U.K.

1 Oct 2021 2022 Rate Hike Now Likely, Following Big GDP Revisions

  • The shortfall in GDP in July from its pre-Covid peak has been revised to just 1.3%, from 2.5% previously.
  • Future growth, however, will be weak; both government spending and households' incomes will fall...
  • ...So the MPC can take its time; we now expect a Q2 rate rise, but then a 12-month delay until the next hike.

Samuel Tombs (UK Economist)U.K.

30 Sept 2021 Consumers are Missing in Action, will they Finally Stop Saving in Q4

  • Households continued to add to their stock of savings at a faster rate in August than before Covid.
  • Unsecured lending rose only modestly too; lower confi- dence in September points to still-subdued spending.
  • Surging energy prices mean we are lifting our 2022 CPI inflation forecast to 3.4%, from 3.2% two weeks ago.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Money & Credit, August 2021

  • In one line: Households still saving more than usual; psychology unlikely to improve in Q4.

Samuel Tombs (UK Economist)U.K.

27 Sept 2021 Survey Data Continue to Point to Sluggish GDP Growth in Q3

  • The fall in the composite PMI in September chimes with other data suggesting growth was sluggish in Q3.
  • Survey data also suggest the number of furloughed workers has fallen only marginally in recent weeks.
  • GDP growth will disappoint the BoE's expectations in Q3 and Q4, making a rate hike in Q1 2022 unlikely.

Samuel Tombs (UK Economist)U.K.

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