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.

forecast

28 Feb 2022 Markets Still Overestimating the Scope for Further Rate Hikes

  • Real household disposable income is set to drop by 2.0% this year, the most since the Second World War.
  • The Chancellor likely won't come to households' res- cue; debt interest and military spending is set to jump.
  • We have nudged down our GDP forecast and now expect it to be up only 1.5% year-over-year in Q4.

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.

22 Feb 2022 The PMI Points to a Swift Recovery from Omicron and Solid Q1 Growth

  • Markit's composite PMI points to brisk GDP growth in Q1; the Omicron hit has faded quickly.
  • Other indicators, however, including the ONS' BIC survey, are less upbeat, so we expect 0.6% q/q growth.
  • Output prices in the manufacturing and services sec- tor are still surging; a March rate hike is a done deal.

Samuel Tombs (UK Economist)U.K.

21 Feb 2022 The Recovery in Households' Spending is Starting to Flag

  • Retail sales in January were still 0.5% below their Q4 average, despite rising by nearly 2% from December.
  • Omicron weighed on sales at the start of the month, but the real income squeeze also is becoming a factor.
  • Households' real spending will rise further, as savings are drawn upon, but retailers don't stand to benefit.

Samuel Tombs (UK Economist)U.K.

18 Feb 2022 The Consensus for January Retail Sales is far too Low

  • We look for a 2.8% month-to-month jump in January retail sales volumes, more than double the consensus.
  • The BRC's figures look strong, even after adjusting for base effects and inflation.
  • Pay settlements have picked up in January by much less than the MPC feared earlier this month.

Samuel Tombs (UK Economist)U.K.

17 Feb 2022 Inflation Data Bolster the Case for Rate Hikes, but not 50bp in One Go

  • January's 5.5% rate of CPI inflation only just exceeded the MPC's 5.4% forecast; the surprise was all in goods.
  • Services inflation is only slightly above its long-run average; the MPC needn't panic.
  • The headline rate likely will peak at 7.7% in April, but then fall swiftly, potentially undershooting the target in 2023.

Samuel Tombs (UK Economist)U.K.

15 Feb 2022 January CPI Inflation to Maintain the Pressure on the MPC

  • We think CPI inflation rose by 0.1pp to 5.5% in January, but annual weight changes increase the uncertainty.
  • Core goods prices surely leapt; data from the Eurozone and the U.K.'s BRC point to a very large increase.
  • A base effect likely depressed accommodation services inflation, but wider services inflation is trending up.

Samuel Tombs and Gabriella DickensU.K.

9 Feb 2022 Will Households Spend More this Year, Despite Falling Real Incomes?

  • Real household disposable income looks set to drop by nearly 2% this year, the most since 1977...
  • ...But consumers can draw on the savings they amassed during the pandemic and borrow more.
  • We expect the saving ratio to fall to 4.5% in 2022—1.5pp below its pre-Covid level—so that spending rises further.

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.

7 Feb 2022 Forecast Review: Two More Rate Hikes and the MPC Will be Done

  • We have revised up our forecast for CPI inflation again, and now expect it to peak at 7.5% in April.
  • The squeeze on real incomes is set to be intense, though savings depletion should support spending.
  • We now expect the MPC to hike Bank Rate to 0.75% in March and 1.0% in May, but then to go no further.

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.

28 Jan 2022 Will the MPC Endorse the Upward Shift in the Market Rate Curve?

  • The MPC likely will hike Bank Rate next week, but the 95% probability priced-in by markets looks too high.
  • The MPC warned in November that spare capacity would emerge if rates rose as far as markets expected…
  • ...The curve is up 30bp since, with no cause for greater medium-term optimism; beware another dovish nudge.

Samuel Tombs (UK Economist)U.K.

26 Jan 2022 Surging Interest Costs Won't Stop Sunak Easing the Real Wage Squeeze

  • Public borrowing in 2021/22 looks set to come in at about £170B, £13B below the OBR's Budget forecast.
  • The hit from higher interest payments will exceed the windfall from higher-than-forecast GDP in 2022/23...
  • ...But Mr. Sunak built some wriggle room into his plans; he can intervene on energy prices and meet his targets.

Samuel Tombs and Gabriella DickensU.K.

20 Jan 2022 The MPC will React Immediately to December's Blowout CPI Figure

  • We are bringing forward our forecast for the next two increases in Bank Rate, following December's CPI data.
  • While food, energy and goods prices are mainly to blame for high inflation, services inflation has risen too.
  • CPI inflation, however, will fall sharply in H2 and should be below target in 2023, curtailing the hiking cycle.

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.

12 Jan 2022 The Omicron Peak has Passed, Teeing up GDP to Rebound in February

  • Omicron cases have peaked and hospital admissions will too soon, at only half their January 2021 peak.
  • We now expect Plan B rules to expire on January 26, rather than be extended for another month...
  • ...So we are revising up our forecast for quarter-on-quarter GDP growth in Q1 to 0.2%, from zero.

Samuel Tombs (UK Economist)U.K.

11 Jan 2022 The MPC won't Match the U.S. Fed's Rate Hiking Pace This Year

  • Investors expect U.K. official rates to rise by 98bp this year, exceeding the 86bp anticipated rise in the U.S.
  • U.K. households, however, are less well-placed than those in the U.S. to withstand higher rates.
  • The MPC will switch to QT before the Fed, while membership  changes will strengthen the doves' hands.

Samuel Tombs (UK Economist)U.K.

7 Jan 2022 Timely Indicators are Consistent with a Drop in GDP in December

  • Near-real-time indicators are broadly consistent with our forecast that GDP fell by 0.6% m/m in December.
  • OpenTable/CHAPS data signal weak pre-Christmas trading for hospitality; transport usage dipped too.
  • Omicron cases, however, should fall substantially by February, enabling GDP to begin rising again.

Gabriella DickensU.K.

4 Jan 2022 Forecast Review: Q1 GDP to be no Higher than in Q4, due to Omicron

  • Consumer caution in response to Omicron points to a near-1% fall in GDP between November and January.
  • Surging energy prices have forced us to revise up our forecast for this year's peak rate of CPI inflation to 6.0%.
  • The MPC, however, likely will wait until March to hike rates again, given the large hit to activity from Omicron

Samuel Tombs (UK Economist)U.K.

24 Dec 2021 House Prices will Stagnate in H1 2022, but are Unlikely to Fall Outright

  • House price growth dipped in October following the return of Stamp Duty Land Tax threshold to £125K...
  • ...But that most likely is a blip; timelier indicators of house price growth have remained strong in Q4.
  • We expect house price growth to stagnate in H1 2022, as mortgage rates rise and real incomes fall.

Gabriella DickensU.K.

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