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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1 Dec 2021 Near-Real-Time Data Already Show a Small Hit to Activity from Omicron

  • The recent measures implemented by the government will have limited direct impact on the economy...
  • ...But near-real-time data already show consumers are pulling back a bit in response to the new variant.
  • A "lockdown lite" set of restrictions could subtract 1.5% from Q1 GDP; expect a 6% hit with a full lockdown.

Samuel Tombs and Gabriella DickensU.K.

29 Nov 2021 Forecast Review: MPC Caught Between Higher Inflation and Omicron

  • 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.

26 Nov 2021 Could Europe's Covid Wave Enfeeble Britain's Recovery?

  • The fast rollout of boosters has reduced U.K. hospital admissions, whereas they are surging across Europe.

    Economic contagion for the U.K. in the event of fresh restrictions in the rest of Europe should be modest.

    Manufacturing output would be unaffected, while the weaker euro will help to lower U.K. CPI inflation in 2022.

Samuel Tombs (UK Economist)U.K.

24 Nov 2021 Is Mr. Sunak's Fund for Future Tax Cuts Already Under Threat?

  • Rising interest payments are slowing the rate that public borrowing is falling.
  • Fiscal headroom probably will be just half that assumed in the October Budget…
  • …But Mr. Sunak still will have a free hand in signing off pre-election tax cuts in 2023.

Samuel Tombs (UK Economist)U.K.

18 Nov 2021 October's CPI Data Tip the Scales Towards a December Rate Hike

  • 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.

15 Nov 2021 October's CPI Inflation Print Likely Will Exceeded the Consensus

  • 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.

12 Nov 2021 Weak GDP Growth in Q3 Leaves the U.K. as the G7's Straggler Again

  • 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.

8 Nov 2021 September GDP will Give the MPC Further Pause for Thought

  • We think GDP merely held steady in September, undershooting the consensus and the BoE's forecast.
  • Data from other countries show that industrial pro- duction was impeded by component shortages.
  • Car sales fell sharply in September, while the "stay- cationing" boost to the hospitality sector ended.

Samuel Tombs (UK Economist)U.K.

5 Nov 2021 Markets Jolted Back to Reality by a Cautious MPC

  • 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.

3 Nov 2021 Is the Outlook for Households' Incomes Brighter After the Budget?

  • Budget announcements, including the jump in National Living Wage, will support earnings growth next year...
  • ...but higher taxes and inflation suggest real take home pay will fall by 1.5%, the most since 2011.
  • This is one key reason we expect the MPC will hike Bank Rate by less than markets currently expect.

Samuel Tombs (UK Economist)U.K.

1 Nov 2021 Forecast Review: Rate Hikes Loom Closer, But Not This Week

  • The near-term outlook for GDP has worsened, but 2022 looks a little brighter in the wake of the Budget.
  • Higher energy prices mean we have revised up our forecast for CPI inflation in 2022 to 3.6%, from 3.4%.
  • We now expect two rate hikes, not one, in the next 12 months, but still anticipate no change this week.

Samuel Tombs (UK Economist)U.K.

29 Oct 2021 Higher Government Spending to Force the MPC's Hand, but Not Yet

  • The MPC's view the output gap has closed means it must counter plans for higher government spending.
  • But the Committee can wait until 2022 to act; the recovery is faltering, and underlying inflation is not high.
  • The MPC will see key jobs data if it waits until December; higher rates are coming, but not just yet.

Samuel Tombs (UK Economist)U.K.

28 Oct 2021 A Budget with an Eye on the Next Election, not Near-Term Popularity

  • The Chancellor spent only about half of the windfall stemming from the OBR's rosier economic forecasts...
  • ...In order to build scope to cut taxes before the next election, while still meeting his new fiscal targets.
  • The OBR's new GDP forecasts are too upbeat, while its debt interest forecast is too low, but this won't matter.

Samuel Tombs and Gabriella DickensU.K.

27 Oct 2021 Inflation Expectations Data Leave Room for the MPC to Prevaricate

  • Households' medium-term inflation expectations fell by 0.1pp to 3.7% in October, according to YouGov/Citi.
  • Nearly all the rise in expectations can be explained by current inflation rates; no sign of de-anchoring.
  • Manufacturing output isn't that sensitive to energy prices; we continue to expect modest growth in Q4.

Samuel Tombs and Gabriella DickensU.K.

20 Oct 2021 Backdrop of Rising Borrowing Costs Will Force Mr. Sunak to be Cautious

  • The OBR likely will revise smaller its "scarring" estimate only to 2.5% of GDP, from 3.0% previously.
  • The resulting uplift to future tax revenues will be offset by higher projections for interest payments.
  • Mr. Sunak will have little, if any, headroom in meeting his target for a balanced current budget in three years' time.

Samuel Tombs (UK Economist)U.K.

19 Oct 2021 Here's What Governor Bailey Actually Said

  • Are you sure Governor Bailey said something new on Sunday? Governor Bailey thought not.
  • The statement "we will have to act" was qualified; medium-term inflation expectations need to be worrying.
  • Confidence has fallen in response to rising inflation expectations;  workers don't expect wages to keep pace.

Samuel Tombs (UK Economist)U.K.

18 Oct 2021 September's CPI Data will be the Calm Before the Storm

  • CPI inflation likely was unchanged in September from August's 3.2% rate.
  • Used car prices have surged again, while surveys point to retailers increasing prices faster than usual...
  • ...But motor fuel prices rose only slightly, and accom- modation and food services inflation likely fell back.

Samuel Tombs (UK Economist)U.K.

15 Oct 2021 The OBR's New Interest Payments Forecast will Make Mr. Sunak Wince

  • The OBR likely will revise up its forecast for debt interest payments in 2022/23 by nearly 1% of GDP.
  • Interest payments will be boosted by the outlook for high inflation and markets' expectations for rate hikes.
  • The MPC's plans to shrink the APF will mean more debt is financed at prevailing gilt rates, not Bank Rate.

Samuel Tombs (UK Economist)U.K.

14 Oct 2021 Recovery Sluggish Even Prior to the Withdrawal of Fiscal Support

  • August's 0.4% m/m rise in GDP sets it up for a 1.5% q/q rise in Q3, below the 2.1% expected by the MPC.
  • Health sector output probably rebounded in September, but the "staycationing" boost likely faded.
  • We're lowering our Q4 GDP forecast to 1.0% q/q, from 1.2%; fiscal, fuel and energy headwinds are strong.

Samuel Tombs (UK Economist)U.K.

4 Oct 2021 Forecast Review: One Rate Hike in 2022 Now Looks Likely

  • We have lowered our forecast for Q4 GDP, due to the impaired supply of fuel and industrial inputs.
  • Surging energy prices have forced us to hike our forecast for CPI inflation in 2022 to 3.4%, from 2.5%.
  • We now expect the Committee to hike Bank Rate in Q2 2022, but we don't buy investors' hawkish view.

Samuel Tombs (UK Economist)U.K.

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