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.

motor fuel

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.

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.

9 Sept 2022 UK Monitor A Recession Now Looks Unlikely, following Bold Energy Price Action

  • The average household will spend less on energy over the next six months than during the last six.
  • So a winter recession now looks unlikely, and the MPC can return to focussing on core CPI inflation.
  • Fiscal policy will stabilise demand, not lift it; job market slack still looks set to emerge, limiting rate hikes.

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.

30 Aug 2022 UK Monitor CPI Inflation to Top 17% in January, if Energy Prices Now Hold Steady

  • Futures prices indicate that the energy price cap will rise by a further 52% in January and 38% in April...
  • ...Implying that energy will directly boost the headline rate of CPI inflation early next year by 11pp.
  • Markets' bets on even faster rate hikes look misplaced; higher energy prices mean more labour market slack.

Samuel Tombs (UK Economist)U.K.

26 Aug 2022 UK Monitor It's Not all Bad News on the Inflation Front

We expect Ofgem to announce today that the default tariff cap will increase by 80% in October.

This will boost CPI inflation by 4pp, assuming the ONS treats the government's grant as a fiscal transfer.

Core goods inflation, however, is set to fall sharply this winter; manufacturers and retailers have excess stock.

Samuel Tombs (UK Economist)U.K.

22 Aug 2022 UK Monitor How Much Longer Can Consumers Hold the Line?

Retail sales edged up in July and will benefit in August from Cost of Living grants and the NI threshold hike.

October's energy bill increase will hit real incomes by nearly 4pp; current grants will offset only half that hit...

...But the next PM likely will beef up and extend the current grants sufficiently to prevent a recession.

Samuel Tombs (UK Economist)U.K.

19 Aug 2022 UK Monitor The U.K.'s High Inflation is Due to Fiscal Policy, Not an Overheating Economy

The U.K.'s relatively high rate of CPI inflation is largely due to government policies.

The energy price shock has been softened by grants, not tax cuts; VAT and NICs hikes have also played a role.

Higher core goods inflation than in the Eurozone is largely due to Brexit, not stronger underlying demand.

Samuel Tombs (UK Economist)U.K.

18 Aug 2022 UK Monitor The Pace of Core Price Rises will Slow Soon, Broadening the MPC's Options

A jump in food prices was the main driver of July’s rise in CPI inflation, and the overshoot of the MPC’s forecast.

The core CPI continued to rise quickly, but recent falls in commodity prices point to slower increases ahead.

Lower petrol prices will mean CPI inflation undershoots the MPC’s forecast in August; a 25bp hike is on the table.

Samuel Tombs (UK Economist)U.K.

16 Aug 2022 UK Monitor A Growing Trade Deficit will Increase Reliance on the Kindness of Strangers

The trade deficit has hit a record share of GDP over the last two quarters, but it will only get worse.

Goods imports will fall, as firms now have excess stock, but the value of energy imports will surge this winter.

The U.K.'s shortfall in exports relative to 2018 remains the largest in the G7; Brexit is largely to blame.

Samuel Tombs (UK Economist)U.K.

12 Aug 2022 UK Monitor CPI Inflation Likely Neared 10% in July, in line with the MPC's Forecast

CPI inflation likely jumped to 9.9% in July, from 9.4% in June, led by rises in motor fuel and food CPI inflation.

Eurozone data and the BRC's figures both point to a renewed rise in core goods CPI inflation in July.

Surveys show services prices have continued to rise at an above-average rate, albeit less quickly than in Q2.

Samuel Tombs (UK Economist)U.K.

26 July 2022 U.K. Monitor Retail Sales Will Recover in Q3, but this will be a False Dawn

Retail sales fell by 1.2% quarter-on-quarter in Q2, as households reduced big-ticket discretionary purchases.

Real household disposable income looks set to rise in Q3, thanks to government support measures.

But even if Ms. Truss pushes through her tax cuts, incomes will drop back in the winter, impeding sales.

Samuel Tombs (UK Economist)U.K.

21 July 2022 UK Monitor June's CPI Data Unlikely to Spur the MPC to Hike by 50bp Next Month

The headline rate of CPI inflation topped the MPC forecast in June, due to higher motor fuel and food prices.

But the core rate fell, undershooting its forecast, as retailers struggled to pass on higher producer prices.

Core CPI inflation will fall sharply early next year, when recent falls in commodity prices will feed through.

Samuel Tombs (UK Economist)U.K.

19 July 2022 The MPC Won't be Distracted by Tax Cut Proposals for Now

The tax cut plans of Tory leadership contenders should be treated with a pinch of salt, given past experience.

Tax cuts won't lift GDP, if they are financed partially by spending reductions; the latter have a higher multiplier.

We doubt that even Ms. Truss would take away the BoE's independence.

Samuel Tombs (UK Economist)U.K.

18 July 2022 Food and Energy Inflation Likely Drove Up the Headline Rate in June

We think that CPI inflation leapt to 9.4% in June, from 9.1% in May, exceeding the MPC’s 9.1% forecast. 

But the upside surprise will be due to a massive rise in motor fuel prices, and another increase in food inflation. 

Core inflation likely fell to 5.8%, from 5.9% in May; June 2021’s surge in goods prices likely wasn’t repeated. 

Samuel Tombs (UK Economist)U.K.

15 July 2022 Sterling is Vulnerable, Due to the Colossal Trade Deficit

The trade deficit remained extremely large by past standards in May, driven by a surge in imports.

We expect the deficit to remain huge over the rest of the year; it is on track to be the biggest since the 70s.

Tory candidates tax pledges would have to be very large in order to alter the economic outlook materially.

Gabriella DickensU.K.

23 June 2022 Core CPI inflation Already has Peaked and will Fall Rapidly in Early 2023

Core CPI inflation declined to 5.9% in May, from 6.2% in April, and will fall further in June.

Retailers are shrinking their margins, rather than passing on surging producer prices fully to consumers.

Faltering demand will constrain future core price rises, enabling the MPC to stop its hiking cycle this year.

Samuel Tombs (UK Economist)U.K.

20 June 2022 CPI Inflation Likely Undershot the MPC's Forecast Again in May

We think the headline rate of CPI inflation was stable at 9.0% in May, despite rising food and fuel inflation. 

Core CPI inflation likely fell; data suggest the rise in goods prices didn’t match the big jump a year ago. 

Retailers are starting to accept a squeeze on the margins, while used car prices are continuing to fall. 

Samuel Tombs (UK Economist)U.K.

16 June 2022 The Trade Deficit is On Course to be the Largest Since the Mid-Seventies

The trade deficit was huge by past standards in April, despite narrowing to £8.5B, from £11.6B in March.

Import values have surged as fuel prices have shot up, while Brexit is continuing to weigh on exports.

We expect the largest trade deficit since the mid-70s in 2022, leaving sterling vulnerable to depreciate further.

Samuel Tombs (UK Economist)U.K.

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