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.

mortgage rates

21 Dec 2022 UK Monitor Official House Price Data are Defying Gravity, but not for Much Longer

  • The official house price data rose by 0.3% month-to-month in October, despite the jump in mortgage rates.
  • But mortgage rates will stay high in 2023, and real disposable incomes will fall; house prices will drop...
  • ...We expect a peak-to-trough fall of 8%, though we are more optimistic on the longer-term outlook.

Gabriella DickensU.K.

30 Nov 2022 UK Monitor Escalating Debt Repayments Point to a Full-Blown Recession

Households are saving more than usual, taking on less credit, and increasing ad-hoc mortgage repayments.

Firms also are choosing to delever; October’s net repayment of external finance was the second largest ever.

House purchase mortgage approvals fell sharply in October; we expect them to fall further this winter.

Samuel Tombs (UK Economist)U.K.

29 Nov 2022 UK Monitor House Prices have Scope to Rebound in the mid-2020s

Incoming data are consistent with our forecast for a sharp fall in house purchases and an 8% drop in prices.

The MPC, however, won’t keep Bank Rate at 4% indefinitely; house prices should rebound in the mid-2020s.

Mortgage payments’ share of incomes will not return to 2010s levels; hefty rent rises have raised the floor.

Samuel Tombs (UK Economist)U.K.

21 Nov 2022 UK Monitor Is the Outlook for Households Really as Bad as the OBR Thinks?

  • The OBR's forecast for the effective mortgage rate looks
    implausibly high; we expect a smaller drop in RHDI...
  • ...But its forecast for the saving rate to fall to a joint-record low, supporting spending, jars with past experience.
  • The saving rate usually rises when the unemployment rate increases; rising rates will spur debt repayments.

Samuel Tombs (UK Economist)U.K.

14 Nov 2022 UK Monitor Britain will Be the First into Recession, and the Last One Out

  • The U.K. is the only G7 country in which GDP fell in Q3
    and has never recovered to its pre-Covid peak.
  • Households’ real spending will keep falling until the end of 2023, as fiscal and monetary headwinds intensify.
  • Higher interest rates will weigh on business investment and trigger a sharp downturn in residential investment.

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.

1 Nov 2022 UK Monitor Households are Holding onto their Savings; Real Spending will Fall.

  • Households saved more and borrowed less than usual in September, as the economic outlook deteriorated.
  • Households will remain cautious as confidence continues to be hit by fears over mortgage payments.
  • Real consumption looks set to drop by 1.5% next year, reflecting a fall in real incomes.

Gabriella DickensU.K.

31 Oct 2022 U.K. Monitor No Shortage of Scary Charts Foretelling a Haunting 2023

  • Rising mortgage rates, energy prices and unemploy- ment will all drain the life from the economy next year.
  • Real government spending will be strangled in each of the next three years, in order to get the debt ratio falling.
  • A further rise in long-term sickness will be another un- welcome shock; no escaping a prolonged recession.

Samuel Tombs (UK Economist)U.K.

24 Oct 2022 UK Monitor Retail Sales will Remain on a Downward Trend Next Year

  • Retail sales in September were 2.1% below their 2019 average level; don't blame the extra public holiday.
  • The support to households' incomes from government policies will rise in Q4, then fall sharply next year.
  • Incomes also will be hit in 2023 by mortgage refinancing and job cuts; expect retail sales to keep falling. 

Samuel Tombs (UK Economist)U.K.

6 Oct 2022 UK Monitor Will Households Ever Deplete their Excess Savings Meaningfully

  • Households have not materially depleted the additional savings they accumulated during the pandemic, yet.
  • In real terms, excess savings no longer look impressive, and the distribution has worsened over the last year.
  • Households likely will increasingly use savings to pay off debt, in response to the jump in mortgage rates.

Samuel Tombs (UK Economist)U.K.

4 Oct 2022 UK Monitor Forecast Review, A Recession Induced by Policymakers Lies Ahead

  • We now look for a 1.5% year-over-year drop in GDP in 2023, worse than our prior forecast for a 1.2% decline.
  • The Energy Price Guarantee has shored up real in- comes, but the tax cuts are counterproductive, net...
  • ...The hit from the resulting drop in sterling and rise in mortgage rates will outweigh the direct fiscal boost.

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.

27 Sept 2022 UK Monitor Will the MPC Pick Prolonged High Inflation or a Mortgage Crisis

  • A recession now is all but inevitable; the key questionis how the pain will be distributed.
  • Hiking Bank Rate to 6% would crush domestically-generated inflation; mortgage defaults would soar.
  • Hiking more slowly would depress sterling and boost imported inflation, but is the lesser evil for the MPC.

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.

22 Sept 2022 UK Monitor Gilt Issuance to Hit Eye-Watering Levels Next Year

  • Public borrowing has tracked the OBR's forecast this year, but government spending now will soar.
  • Loans to energy suppliers, to limit energy price rises, will boost the cash requirement, but not borrowing.
  • We look for a gross financing requirement of about £325B in 2023/24, but the outlook is very uncertain.

Samuel Tombs (UK Economist)U.K.

21 Sept 2022 UK Monitor Mortgage Refinancing Set to Deliver a 1pp hit to Disposable Incomes in 2023

  • The effective interest rate for all mortgages has risen only slowly to date, but now looks set to soar...
  • ...As a rising number of borrowers refinance, and as lenders respond to the further jump in risk-free rates.
  • Expect a 1pp disposable income hit in 2023 if Bank Rate tops 4%, or a 0.7pp drag if Bank Rate tracks our forecast.

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.

15 Sept 2022 UK Monitor Will the Better News on CPI Inflation Keep Coming?

  • The month-to-month change in the August core CPI exceeded its seasonal norm by the least this year.
  • The recent decline in commodity prices suggests core CPI inflation will fall sharply next year.
  • Services inflation will be stickier, but the current support from energy price rises and VAT changes will fade.

Samuel Tombs (UK Economist)U.K.

8 Sept 2022 UK Monitor August's CPI Report will Temper Bets on a 75bp Rate Hike

  • CPI inflation likely fell to 9.9% in August, from 10.1% in
    July, returning to the level forecast by the MPC.
  • A slump in motor fuel CPI inflation likely dominated the further pick-up in food inflation.
  • BRC data show the pace of core goods price rises eased in August; July's large jump in rents won't be repeated.

Samuel Tombs (UK Economist)U.K.

6 Sept 2022 UK Monitor How will Energy Price Interventions Impact the Inflation Outlook?

  • Ms. Truss has been tight-lipped about her plans, but a
    trade body plan to freeze prices is gaining traction.
  • If implemented, CPI inflation will return to the 2% target in 2023, easing the pressure for further big rate hikes.
  • Firms need help too, though we think Ms. Truss will cut business rates and provide grants, not reduce VAT.

Samuel Tombs (UK Economist)U.K.

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