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.
monetary policy
- 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.
- 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.
- 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.
- 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.
- The return of monthly saving to pre-Covid levels is a sign of the real income squeeze, not surging spending.
- The recent surge in house prices, however, is enabling refinancing homeowners to access lower interest rates.
- Firms continued to repay external borrowing in November, but we remain upbeat on the capex outlook.
Samuel Tombs and Gabriella DickensU.K.
- 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.
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.
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.
- 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.
- CPI inflation likely rose to 4.8% in November—0.3pp above the MPC's forecast—from 4.2% in October.
- Used car prices still are rising rapidly, while supermar- kets are passing on higher food prices to shoppers.
- Tobacco prices were lifted by a duty hike, while cloth- ing CPI inflation likely was boosted by a base effect.
Samuel Tombs (UK Economist)U.K.
- The MPC would ease monetary policy again in the unlikely event that another lockdown is imposed.
- Fiscal policy would be less supportive than in previous lockdowns; new curbs would dampen inflation.
- Negative rates are in the toolkit and are preferred to more QE; Bank Rate likely would be cut to -0.25%.
Samuel Tombs (UK Economist)U.K.
- 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.
- Recent activity data have surprised to the upside, but the Omicron variant casts a shadow over Q1.
- The near-term path for inflation looks much higher than a month ago, after October's above-consensus data.
- The MPC likely will hike Bank Rate in December, but markets' expected 2022 rate path looks far too steep.
Samuel Tombs (UK Economist)U.K.
- Capex failed to pick up at all in Q3, as firms struggled to get their hands on transport equipment.
- Firms, however, appear keen to invest and have the financial resources, so a rebound remains likely.
- We expect capex to rise by about 10% in 2022 and 4% in 2023, eventually returning to 2019's level.
Samuel Tombs (UK Economist)U.K.
- MPC members Bailey and Pill are sitting on the fence, despite last week's upside data surprises.
- In a weekend paper interview, the Governor highlighted the public sector's role in driving the recovery.
- We put the odds of a December rate hike at 60%, well below the 80-to-90% range priced by markets.
Samuel Tombs (UK Economist)U.K.
- October's 4.2% rate of CPI inflation was well above the MPC's 3.9% forecast; such a large error margin is rare.
- The upside surprise came from the core, and will carry over to future months; April's peak looks set to top 5%.
- Mean-reversion in energy and goods prices, however, should ensure that CPI inflation dips below 2% in 2023.
Samuel Tombs (UK Economist)U.K.
- Energy prices likely were the key driver of higher CPI inflation in October, but the core rate probably rose too.
- Used car prices rocketed again, while data from the BRC point to a chunky rise in clothing prices.
- Hospitality firms probably raised prices in response to the VAT hike; the boost is uncertain but likely large.
Samuel Tombs (UK Economist)U.K.
- U.K. GDP was 2.1% below its Q4 2019 level in Q3, exceeding the shortfalls seen in other G7 counties.
- Households have continued to spend more cautiously than those abroad; high virus levels are partly to blame.
- Brexit also has contributed to the continued underper- formance; exports were 17% below their 2019 average.
Samuel Tombs (UK Economist)U.K.
- On balance, we still think the MPC won't act next month; Mr. Bailey hinted October's labour data may not suffice.
- The MPC's inflation forecasts seemingly support markets' view that rates will rise to 1.0% by the end of 2022...
- ...But they are based on implausible energy price figures; its spare capacity forecasts point to a lower rate path.
Samuel Tombs (UK Economist)U.K.
- In one line: Retaining its cautious approach.
Samuel Tombs (UK Economist)U.K.
