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.

employment growth

25 Nov 2022 UK Monitor Why Do We Expect Unemployment to Rise Sooner than Official Forecasters?

Past recessions show a much shorter lag between falling GDP and employment than the OBR and BoE now expect.

Vacancy data likely provide false comfort; they didn't forewarn of declining employment in early 2008.

Survey measures of employment have fallen sharply; the big corporate financing shock points to layoffs.

Gabriella DickensU.K.

24 Nov 2022 UK Monitor PMI Data Still Point to a Recession and Intense Price Pressures

  • S&P's survey points to another 0.2% q/q drop in GDP in Q4 and the likelihood of a faster decline in Q1.
  • The employment index remained slightly above its long-run average, but it tends to lag the PMI.
  • Output prices still are rising too fast for the MPC to tolerate, but leading indicators point to a slowing soon.

Gabriella DickensU.K.

23 Nov 2022 UK Monitor The Chances of Public Borrowing Falling Below 3% of GDP are Remote

  • Borrowing undershot the consensus in October due to the timing and under-recording of energy support.
  • The OBR's GDP forecasts assume an implausibly low saving rate and too rapid productivity growth...
  • ...Plans for very tight public spending won't be stuck to; borrowing eventually will settle at about 4% of GDP.

Samuel Tombs (UK Economist)U.K.

16 Nov 2022 UK Monitor Stable Employment in Q3 Shouldn't Undermine Conviction in Future Falls

  • Employment essentially held steady in Q3, despite the fall in GDP; vacancies have remained at a high level too.
  • But the rise in corporate borrowing costs looks set to be sharp enough to spark a wave of redundancies next year.
  • Wage growth was far too strong for the MPC too tolerate in September, but timelier data point to a slowdown.

Samuel Tombs (UK Economist)U.K.

11 Nov 2022 UK Monitor The Downturn in House Prices is Only Just Getting Started

  • Timely data show house prices now are falling in the face of surging mortgage rates and falling real incomes.
  • Supply is becoming scarcer, but it is not keeping up with cratering demand, we still expect prices to fall by 8%.
  • Watch out for a jump in wage growth in September; many public sector workers received a 5% pay rise.

Samuel Tombs (UK Economist)U.K.

12 Oct 2022 UK Monitor The Labour Market Won't Remain Tight for Much Longer

  • Employment was broadly flat in Q3, but the recent jump in firms' borrowing costs signals a big fall ahead.
  • Long-term sickness looks set to rise further, but government policies likely will boost the workforce in 2023.
  • We expect the unemployment rate to peak at about 5.5%, easily high enough to subdue wage growth.

Samuel Tombs (UK Economist)U.K.

10 Oct 2022 UK Monitor August GDP and Labour Market Data to Point to Stagnation

  • We look for a small 0.1% month-to-month rise in GDP
    in August; that’s probably the last rise for this year.
  • The single-month measure of employment fell in June and July, but surveys signal modest growth in August.
  • Recent wage indicators have painted a mixed picture; expect year-over-year growth to rise only modestly.

Samuel Tombs (UK Economist)U.K.

5 Oct 2022 UK Monitor The Outlook for Corporate Debt Costs is at least as Bad as for Mortgages

  • Over three-quarters of firms’ bank loans are floating rate; interest payments will absorb 20% of profits soon.
  • In total, firms’ financial assets are worth more than bank & bond debt, but they are mismatched between firms.
  • The change in firms’ borrowing costs has been a good leading indicator of employment and capex in the past.

Samuel Tombs (UK Economist)U.K.

28 Sept 2022 UK Monitor Surveys Point to a Small Drop in GDP in Q3, but this is Just the Start

  • PMI and confidence data for September suggest GDP edged down for a second consecutive quarter in Q3.
  • The downturn will gather momentum, as borrowing costs for households and businesses soar.
  • We now look for a 1.5% year-over-year decline in GDP in 2023, and CPI inflation not to return to 2% until 2025.

Samuel Tombs (UK Economist)U.K.

26 Sept 2022 UK Monitor Mini-Budget Measures Won't Revitalise the Economy Next Year

  • Tax cuts which disproportionately benefit the top 1% of earners will do little to boost demand.
  • Most households are worse off, because the associated depreciation of sterling will raise the price level by 1.5%.
  • Mr. Kwarteng likely will impose tough spending limits in the Budget, to try to reverse the jump in gilt yields. 

Samuel Tombs (UK Economist)U.K.

23 Sept 2022 UK Monitor MPC Likely to Stick to Another 50bp Hike in November, Despite Tax Cuts

  • The improved near-term outlook for CPI inflation has left the MPC less anxious about second-round effects.
  • The MPC is awaiting more details on fiscal policy; a 75bp hike in November can't be ruled out...
  • ...But the proposed tax cuts will do little to boost GDP, and spending might be cut; we still expect a 50bp hike.

Samuel Tombs (UK Economist)U.K.

20 Sept 2022 UK Monitor August's Drop in Retail Sales Makes a 50bp Bank Rate Hike More Likely

  • The drop in August’s retail sales volumes was below consensus, but almost matched our forecast.
  • The weakness was broad based; consumers cut back on both essential and discretionary goods.
  • The larger-than-consensus fall makes a 50bp increase in Bank Rate this week more likely than a 75bp hike.

Gabriella DickensU.K.

14 Sept 2022 UK Monitor Wage Growth Remains too High for the MPC, But that will Change in 2023

  • Employment has stopped rising, but labour market slack hasn't accumulated, due to increasing inactivity.
  • We expect labour demand to remain flat but the workforce to grow, as immigration and participation recover.
  • For now, wage growth is too hot for the MPC, but building slack and falling CPI inflation will slow it in 2023.

Samuel Tombs (UK Economist)U.K.

13 Sept 2022 UK Monitor Q3 GDP Set to be Unchanged from Q2, Undershooting the MPC's forecast

  • June's 0.2% month-to-month rise in GDP was due to the unwinding of the Jubilee hit; the trend is flat.
  • We’re pencilling-in a 0.2pp hit to September GDP from the extra public holiday, but can’t rule out a bigger fall.
  • Even excluding the impact of the Queen’s funeral, Q3 GDP looks set to undershoot the MPC’s forecast.

Samuel Tombs (UK Economist)U.K.

12 Sept 2022 UK Monitor Labour Market and Retail Sales Data to Persuade the MPC to be Cautious

  • Business surveys and vacancy data point to another negligible rise in payroll employees in August.
  • Wage growth likely remained slightly too strong for the MPC, but probably didn't gain more momentum.
  • BRC data point to a below-consensus fall in retail sales in August; the MPC won't up the hiking pace.

Samuel Tombs (UK Economist)U.K.

5 Sept 2022 UK Monitor Forecast Review: Lifting Our Bank Rate Forecast, Despite a Looming Recession

  • The jump in energy prices in August means we now expect CPI inflation to peak just above 16% in April 2023.
  • Wage and inflation expectations have risen too, so we now see 50bp rate hikes in September and November.
  • Extra fiscal support likely won't stop a consumer down- turn; an early 2023 recession has become our base case.

Gabriella DickensU.K.

30 Aug 2022 UK Monitor CPI Inflation to Top 17% in January, if Energy Prices Now Hold Steady

  • Futures prices indicate that the energy price cap will rise by a further 52% in January and 38% in April...
  • ...Implying that energy will directly boost the headline rate of CPI inflation early next year by 11pp.
  • Markets' bets on even faster rate hikes look misplaced; higher energy prices mean more labour market slack.

Samuel Tombs (UK Economist)U.K.

24 Aug 2022 UK Monitor Flash PMIs Suggest the Economy is Stagnant at Best

August’s PMIs suggest the recovery has petered out, with the manufacturing sector heading into recession.

Employment growth also has come off the boil, while price pressures mostly have continued to ease.

All this suggests the MPC have room to act with caution; a 50bp hike is not the done deal assumed by markets.

Samuel Tombs (UK Economist)U.K.

19 Aug 2022 UK Monitor The U.K.'s High Inflation is Due to Fiscal Policy, Not an Overheating Economy

The U.K.'s relatively high rate of CPI inflation is largely due to government policies.

The energy price shock has been softened by grants, not tax cuts; VAT and NICs hikes have also played a role.

Higher core goods inflation than in the Eurozone is largely due to Brexit, not stronger underlying demand.

Samuel Tombs (UK Economist)U.K.

17 Aug 2022 UK Monitor Labour Market Slack will Continue to Build, Easing Wage Pressures

Growth in employment in the three months to June undershot the consensus by the most in nearly two years.

The workforce, by contrast, is finally picking up, assisted by a recovery in immigration, which will be maintained.

Vacancy and payroll employee data indicate labour demand is stagnating; unemployment will rise further.

Samuel Tombs (UK Economist)U.K.

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