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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12 May 2022 Negligible Employment Growth in Q1, Despite Strong Surveys?

The LFS measure of employment was essentially unchanged in Q1, despite the strength implied by surveys.

But the unemployment rate probably fell to a 47-year low of 3.7%, due to a contraction in the workforce.

Headline wage growth likely edged up, but remained well below CPI inflation; this gap will persist.

Gabriella DickensU.K.

3 May 2022 Forecast Review, The Near-Term Outlook for GDP Has Worsened

The near-term outlook for households' real disposable income looks bleak; we still expect GDP to drop in Q2.

A recession, however, isn't our base case; people have ample scope to draw on savings and to borrow more.

We now Bank Rate to top out at 1.25% this year, not 1.00%, but still think markets have lost the plot.

Samuel Tombs (UK Economist)U.K.

19 Apr 2022 The Recent Strength in House Price Growth Won't Last Much Longer

House price growth was strong in Q1, but will now slow, due to rising mortgage rates and falling real incomes.

Several timely indicators of demand, including the RICS new buyer enquiries balance, are starting to soften.

House price growth looks set to slow to 4.5% this year, and mortgage approvals will fall to pre-Covid levels.

Gabriella DickensU.K.

UK Datanote: U.K. Labour Market Data, February/March 2022

  • In one line: The recovery in employment is back on track.

Samuel Tombs (UK Economist)U.K.

13 Apr 2022 A Recovery in the Workforce will Limit Wage Pressures in 2022

Employment started to rise again in the three months to February, having fallen in December and January.

The workforce should start to recover this year, reflecting a decline in inactivity and a rise in immigration.

Alongside slower labour demand growth this should mean wages continue to rise more slowly than prices.

Samuel Tombs (UK Economist)U.K.

11 Apr 2022 Rising Mortgage Rates will Soon Call Time on Rapid House Price Gains

The two-year fixed 75% LTV mortgage rate leapt by 35bp to 2.11% in March; it is set to rise to 2.7% by Q4. 

The current tight spread between mortgage rates and risk-free rates is unsustainable; deposit rates will rise too. 

Most refinancers will cope, but the rise in new rates will be severe enough to slow house price growth. 

Samuel Tombs (UK Economist)U.K.

7 Apr 2022 February Data to Show the Recovery in Employment Is Back on Track

We look for a three-month-on-three-month rise in employment of about 30K in February.

Another cohort with a high employment rate left the sample, but surveys signal solid underlying momentum.

The PAYE measure of median pay and settlements data, however, suggest wage growth stayed subdued.

Gabriella DickensU.K.

5 Apr 2022 No Recession Signalled by Financial Market Indicators

The U.K. yield curve has not inverted and inversion is not a reliable bellwether of U.K. recessions.

Equity prices for consumer-facing companies have fallen sharply, but not yet to recession levels.

The oil price has been this high before without triggering a downturn, and GDP is less energy-intensive now. 

Samuel Tombs (UK Economist)U.K.

1 Apr 2022 Don't Mistake the Swift Recovery in GDP for Private Sector Strength

  • GDP has returned to its pre-recession level faster than after the four previous downturns...
  • ...But this strength reflects high government spending; "private-sector" GDP was nearly 3% below its peak.
  • Sub-par growth in households’ financial wealth adds to the list of reasons to expect little dis-saving ahead.

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.

21 Mar 2022 The Housing Market's Strong Start to the Year will Not Endure

  • House prices appear to have risen further in Q1, but timely data suggest that buyer demand now is cooling.
  • The outlook for rising mortgage rates, falling real incomes and low confidence does not bode well.
  • We expect year-over-year growth in house prices to slow from its current 10% rate to 3.5% by year-end.

Gabriella DickensU.K.

16 Mar 2022 The Workforce will Recover this Year, Keeping Wage Pressures in Check

  • Employment is trending up gradually, not falling as the LFS data imply or surging as the PAYE figures indicate.
  • Growth in the workforce should rise this year, as inactivity declines and immigration recovers...
  • ...This will slow the tightening of the labour market and ensure wages continue to rise more slowly than prices.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Labour Market Data, January/February 2022

  • In one line: Still tightening, despite the small drop in employment.

Samuel Tombs (UK Economist)U.K.

11 Mar 2022 Households will Mitigate the Inflation Hit by Shifting their Spending Mix

  • Households previously have reduced real expenditure on food and energy by 1% for every 5% rise in prices...
  • ...So year-over-year growth in the expenditure deflator will be materially lower than CPI inflation this year.
  • The RICS survey shows the housing market continued to fizz in February, but timelier data are sobering.

Samuel Tombs and Gabriella DickensU.K.

UK Datanote: U.K. RICS Residential Market Survey, February 2022

  • In one line: Strong for now, but higher mortgage rates and falling real incomes look set to bite.

Samuel Tombs (UK Economist)U.K.

10 Mar 2022 The MPC will Hike Bank Rate Again Next Week, but Strike a Cautious Tone

  • Markets are more stressed and consumers' confidence is lower than when the MPC has hiked rates before...
  • ...But with Q1 GDP looking better than feared and inflation set to soar, a 25bp rate rise next week is very likely.
  • A 50bp hike is possible if Friday's inflation expectations data are scary, but the MPC won't want to shock now.

Samuel Tombs (UK Economist)U.K.

2 Mar 2022 Slow Money Growth Signals Low Medium-Term Risk of High Inflation

  • Money supply growth is weaker than before Covid, signalling macro policy isn't excessively loose.
  • Households have remained unwilling to draw on their "excess savings" to support consumption.
  • House purchase mortgage approvals in January were 11% above their 2015-to-19 average, but will dip soon.

Samuel Tombs (UK Economist)U.K.

1 Mar 2022 Business Investment Should Ensure GDP Remains on a Rising Path

  • We look for year-over-year growth in business investment to pick-up this year, reaching about 10% in Q4.
  • Brexit and Covid uncertainty has faded, profit margins are healthy, and firms have excess cash.
  • Higher oil prices will boost capex in the North Sea and in energy efficiency, but higher rates will hurt some firms.

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.

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