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.

growth

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.

19 Jan 2022 How Much Longer Will the Employment Miracle Last?

  • Employment has continued to rise, despite the withdrawal of the furlough scheme and the Omicron hit...
  • ...But growth will slow soon; few people who want a job don't have one, while employment taxes will rise in April.
  • Wage growth has cooled, despite the tight job market; real wages look set to fall sharply 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.

13 Jan 2022 Job Moves to Revert to Normal Levels this Year, Dampening Wage Growth

  • The proportion of workers changing jobs surged in 2021 to reach its highest level in the past 20 years...
  • ...But lower confidence and a sluggish housing market will drive job moves back to pre-Covid norms this year.
  • Job-to-job moves also will trend down in the 2020s as the population ages, bearing down on wage growth.

Gabriella DickensU.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.

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.

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.

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.

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.

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.

20 Dec 2021 A 1% Hit to GDP From Omicron is the Best Case Scenario

  • Omicron cases have leapt, but little still is known about the hospitalisation rate; new curbs aren't inevitable.
  • Even with no new restrictions and low Omicron severity, GDP likely will be 1% lower in January than in November.
  • Expect a 2% hit to GDP from a return to "Step Two" rules, and a 6% hit if a full lockdown is imposed.

Samuel Tombs (UK Economist)U.K.

17 Dec 2021 The MPC will Give the Economy Breathing Space Before Hiking Again

Markets now expect the MPC to hike Bank Rate to 0.50% in February, following today's surprise hike.

Most members, however, thought the decision was "finely balanced" and see a "modest" tightening ahead.

Omicron won't just have short-term effects if the MPC hikes again and pushes firms over the edge.

Samuel Tombs and Gabriella DickensU.K.

16 Dec 2021 Subdued Services Inflation Gives the MPC Time to Wait for Omicron

November's 5.1% CPI inflation rate was 0.6pp above the forecast made by the MPC only last month...

...But high inflation is due to surging energy and goods prices; underlying services inflation remains subdued.

We expect the headline rate to peak at 6.0% in April, but then to fall sharply, slipping below-target in 2023.

Samuel Tombs and Gabriella DickensU.K.

15 Dec 2021 Labour Market to Warrant Gradual Rate Hikes, Once Omicron Wanes

The unemployment rate continued to fall in October, despite the end of the furlough scheme.
Some full-time workers have become part-timers post-furlough, but they don't seem to want more hours.
Wage growth, however, slowed to a below-inflation rate in October; the real wage squeeze will get worse.

Samuel Tombs and Gabriella DickensU.K.

14 Dec 2021 Sterling to Continue to Slide in 2022, Hurt by the U.K.'s Covid Sensitivity

Trade-weighted sterling has fallen by about 2% since late October; bets on a further drop have intensified.
The U.K. economy is more Covid sensitive than most; the downside risk to rate expectations is greater.
Investors next year increasingly will price-in the risks of a messy outcome to the next general election.

Samuel Tombs and Gabriella DickensU.K.

13 Dec 2021 The Recovery was Fading Even Before Omicron Emerged

  • October's mere 0.1% m/m increase in GDP shows the recovery had little momentum before Omicron.
  • GDP was near its pre-Covid level only due to surging health activities; private sector GDP was 2.4% adrift.
  • A pullback in consumer services spending will depress GDP over the winter; no rate hike before March.

Samuel Tombs (UK Economist)U.K.

10 Dec 2021 Omicron Damage Likely to Delay the First MPC Rate Hike Until March

  • The MPC likely will hold back from raising Bank Rate next week, despite several upside data surprises.
  • We are cutting our forecast for quarter-on-quarter GDP growth in Q1 to 0.3%, from 0.8%, due to Omicron.
  • The Covid situation won't be better in early February; the March meeting is a better bet for the first rate hike.

Samuel Tombs (UK Economist)U.K.

7 Dec 2021 Real-Time Data Show Clear Hit to Services Firms from Omicron

  • Omicron fears already have led people to travel and visit restaurants, shops and cinemas less often.
  • Booster jabs are containing hospital admissions, but people still have good reasons to avoid being infected.
  • While boosters and school holidays will weigh on cases, Omicron and Christmas festivities will keep R>1.

Samuel Tombs (UK Economist)U.K.

2 Dec 2021 Could the Economy Cope Next Year with the Rate Hike Markets Expect?

  • Markets expect the MPC to hike Bank Rate by nearly 100bp next year, the most in one year since 2007.
  • Rising mortgage rates likely would subtract just 0.1pp from households' disposable incomes next year...
  • ...But house prices would flatline, so 100bp is on the limit of feasibility; Omicron brings downside risks.

Samuel Tombs (UK Economist)U.K.

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U.K. Document Vault, Pantheon Macro, Pantheon Macroeconomics, independent macro research independent research, ian shepherdson, economic intelligence