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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ois rates
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- Low unemployment means few homeowners will be forced to sell up, and construction already is declining.
- Landlords, however, likely will struggle to raise rents in line with the jump in their mortgage payments.
- We expect the stock of homes on the market, therefore, to rise over the next year, weighing on house prices.
Gabriella DickensU.K.
- Households continued to save less and borrow more in July, in order to maintain consumption.
- Looking ahead, though, people lack the fire-power to withstand future income shocks.
- We now think a winter recession will be avoided only if the government beefs up financial support massively.
Gabriella DickensU.K.
