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.

economy

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.

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.

25 Apr 2022 Consumers Must Draw on Savings Soon for a Recession to be Averted

March's retail sales figures were a wake-up call for investors; households are struggling to tread water.

Consumers' confidence weakened further in April and now is only a touch above its all-time low.

We still expect a recession to be avoided, but the risk will weigh on the MPC's forthcoming decisions.

Samuel Tombs (UK Economist)U.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.

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.

25 Feb 2022 The Economy will Stagnate if Energy Prices Stay this High

  • This week's surge in energy prices, if sustained, will boost the CPI by an extra 1.5 percentage points.
  • Households' real disposable incomes now are set to fall by about 2.2% this year, the most since WW2.
  • Below-trend GDP growth lies ahead, which will obviate the need for much higher interest rates.

Samuel Tombs (UK Economist)U.K.

24 Feb 2022 Labour Supply will Pick Up This Year, Keeping Wage Pressures in Check

  • We think that year-over-year growth in the workforce will pick up to 1.0% by the end of 2022...
  • ...Driven by the reversal of half of the rise in inactivity since early 2020, and a recovery in immigration.
  • The number of hours workers are willing to supply also will rise in response to the drop in real wages.

Samuel Tombs (UK Economist)U.K.

23 Feb 2022 The OBR's New Borrowing Forecasts will Make the Chancellor Grimace

  • Rising debt interest payments explain why January's surplus was smaller than the OBR forecast.
  • We expect the OBR to revise up its forecast for public borrowing in 2022/23 to about £97B, from £83B.
  • Mr. Sunak still will meet his fiscal rules, but will preserve his remaining headroom until nearer the next election.

Samuel Tombs (UK Economist)U.K.

14 Feb 2022 The Near-Complete Recovery in GDP Masks Private Sector Weakness

  • U.K. GDP nearly reached its pre-Covid level in Q4, but the recovery still underwhelms by G7 standards.
  • The recovery also has been flattered by huge public spending; private sector GDP was 3.4% below its peak.
  • Exports remain the economy's Achilles heel; they have underperformed since Q1 2021, largely due to Brexit.

Samuel Tombs (UK Economist)U.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.

4 Feb 2022 MPC to Markets: Don't Get Carried Away

  • Investors think the MPC will hike Bank Rate by a further 100bp this year, leaving it at 1.5% by year-end.
  • But the MPC still expects only "modest" further hikes; Bailey was clear: "do not get carried away".
  • The MPC's forecasts for CPI inflation imply rates need to rise only 35bp more to return it to the 2% target.

Samuel Tombs and Gabriella DickensU.K.

3 Feb 2022 Will Supply Constraints Continue to Ease, Reducing Inflation Risk?

  • Supply chain disruptions, bottlenecks and goods and labour shortages have limited the recovery...
  • ...But the last month has brought signs of progress of all fronts, despite the surge in Covid-19 infections.
  • Supply disruptions should continue to ease, but labour shortages probably will be more persistent.

Gabriella DickensU.K.

27 Jan 2022 To Reinvest or not to Reinvest: the £25B Question

  • The MPC's likely decision next week to raise Bank Rate to 0.50% should mark the end of QE reinvestments.
  • The APF will shrink by £25B in March; fallout, however, will be limited, as markets have known for some time.
  • Our working assumption remains the BoE will sell £10B of gilts per quarter when Bank Rate reaches 1%.

Samuel Tombs (UK Economist)U.K.

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.

18 Jan 2022 Markets and Economy Likely to be Little Moved if Mr. Johnson is Ousted

  • The Tories now trail Labour by 10pp in the polls; a no-confidence vote in Johnson is a growing possibility.
  • Markets probably would prefer a more predictable successor who had a less combative Brexit stance...
  • ...But the gap between the Tories and Labour on economic policy has narrowed.

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.

14 Jan 2022 CPI inflation Likely was Stable in December, to the MPC's Relief

  • CPI inflation probably was unchanged at 5.1% in December, giving the MPC some breathing space.
  • Pick-ups in food and used car price inflation likely were offset by falls in the tobacco and clothing components.
  • The seasonal surge in plane ticket prices will boost the CPI less than usual, because its weight has shrunk.

Samuel Tombs (UK Economist)U.K.

10 Jan 2022 Above-Consensus November GDP Data Unlikely to Spur on the MPC

  • We think that GDP increased by about 0.6% month-to-month in November, above the 0.4% consensus.
  • Easing supply-chain blockages seem to have facilitat- ed pick-ups in manufacturing and construction output.
  • Growth in services output was supported by increas- es in retail sales, transport usage and vaccinations.

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.

23 Dec 2021 The U.K. Economy Still is Among the Hardest-Hit in the G7

  • Quarter-on-quarter GDP growth was revised to 1.1% in Q3, from 1.3%, due to GFCF and public spending.
  • The shortfall in U.K. GDP from its pre-Covid Q4 2019 peak still is among the biggest in the G7.
  • Omicron, on top of falling households' real incomes and Brexit, will limit GDP growth in 2022.

Gabriella DickensU.K.

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