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.

public sector

6 July 2022 Britain is Unlikely to Run Out of Natural Gas This Winter

Domestic production accounts for nearly half of natural gas consumption, well above the European average.

Imports from Russia accounted for only 5% of the total; the U.K. has long-term deals with Norway and Qatar.

The bigger risk is that manufacturers are indirectly af- fected by rolling blackouts in other European countries.

Samuel Tombs (UK Economist)U.K.

30 June 2022 Services Inflation is High Only Due to Energy Price Rises and Tax Changes

Rising energy prices likely accounted for 1.6 percentage points of May's 4.9% rate of services CPI inflation.

While the jump in the VAT rate for the hospitality and recreation sector likely has lifted it by a further 0.6pp.

Underlying services inflation, therefore, only just exceeds its 2.5% average rate in the second half of the 2010s.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Public Finances, May 2022

  • In one line: Borrowing exceeding the OBR’s forecast, though downward revisions seem likely.

Samuel Tombs (UK Economist)U.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.

22 June 2022 New Estimates of the Distribution of Households' "Excess Savings"

Estimates of the distribution of savings can be derived by reconciling data from a few ONS surveys.

Our calculations suggest households in the top 10% of the income distribution hold 25% of the excess savings.

The current wave of rail strikes do not meaningfully increase the risk of a recession this year.

Samuel Tombs (UK Economist)U.K.

15 June 2022 Stable Wage Growth and a Reviving Workforce will Cheer the MPC

Year-over-year growth in private-sector wages slowed to 4.7% in April, slightly below the MPC’s 4.8% forecast.

The job market no longer is tightening, as the workforce recovers and growth in employment starts to slow.

We still expect the workforce to recover further, anchoring wage growth and easing the pressure for rate hikes.

Samuel Tombs (UK Economist)U.K.

14 June 2022 GDP Set to Contract by about 0.7% Q/Q in Q2, after April's Weak Print

April's fall in GDP was driven by Covid spending, but flat private sector GDP caused the downside surprise.

Consumer services firms likely increasingly struggled during Q2, as households' real incomes fell further.

June's extra bank holiday also will dampen Q2 GDP; the MPC has to lower its forecast for 0.1% q/q growth.

Samuel Tombs (UK Economist)U.K.

13 June 2022 The MPC will Hike by 25bp, but Won't Signal a 50bp Jump in August

The MPC was clear last month; no more than two 25bp rate hikes would be needed to tame inflation.

Since then, activity indicators have weakened and medium-term inflation expectations have stayed low.

A majority will vote again to hike by 25bp, and investors will be left revising the odds of 50bp in August.

Samuel Tombs (UK Economist)U.K.

10 June 2022 April GDP Data Will Confirm the Recovery has Stalled

We look for a mere 0.1% month-to-month rise in GDP in April, only just reversing the prior month's fall.

While output in the manufacturing and distribution sectors probably rebounded.

The consumer services sector was hit by the real income squeeze, and Covid-related spending plunged.

Samuel Tombs (UK Economist)U.K.

8 June 2022 Signs of a Slowdown will Restrain the MPC to a 25bp Hike Next Week

The fall in May’s composite PMI to a 15-month low is a clear sign that growth is faltering as real incomes drop.

Retail and car sales also have been weak; we expect a quarter-over-quarter drop in GDP in Q2 of about 0.5%.

May’s PMI makes it more likely the MPC will hike by just 25bp this month; markets' expectations are too high.

Gabriella DickensU.K.

27 May 2022 The Chancellor's Extra Measures Meaningfully Reduce Recession Risk

The £15B support package is hefty, timely and targeted; it offsets most of October’s £24B energy bill rise.

The extra cash likely will lift GDP by 0.7% in the second half of this year; this matters for monetary policy.

Strikes will become more common over the coming months, but won’t tip the balance towards recession.

Samuel Tombs (UK Economist)U.K.

26 May 2022 Upside Risks to Public Borrowing Won't Stop Mr. Sunak Supporting Households

Public borrowing in April was in line with the OBR’s forecast, but expect upside surprises later this year.

Mr. Sunak likely will not opt to reduce the main rate of VAT; firms would benefit more than households.

Bringing forward April 2023’s large CPI-linked increase in benefits to October would make the most sense.

Samuel Tombs (UK Economist)U.K.

25 May 2022 The Sharp Decline in the PMI Makes a Pause from the MPC Even More Likely

The PMI points to GDP flatlining in Q2, but a fall is more likely, given the plunge in government Covid spending.

The MPC shouldn't take comfort from the resilience of the employment index; it lags changes in the PMI.

Many firms still are hiking prices, but the number absorbing cost rises, due to faltering demand, is growing.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Public Finances, April 2022

  • In one line: A subpar start to 2022/23; central government borrowing is running ahead of target.

Samuel Tombs (UK Economist)U.K.

12 May 2022 Negligible Employment Growth in Q1, Despite Strong Surveys?

The LFS measure of employment was essentially unchanged in Q1, despite the strength implied by surveys.

But the unemployment rate probably fell to a 47-year low of 3.7%, due to a contraction in the workforce.

Headline wage growth likely edged up, but remained well below CPI inflation; this gap will persist.

Gabriella DickensU.K.

9 May 2022 GDP Likely was Unchanged in March, Preluding a Contraction in Q2

The boost to activity from the removal of final Covid restrictions likely was offset by falling health sector output.

Higher energy prices and fresh supply chain frictions, following the war in Ukraine, likely hit manufacturing.

Retail sales and car sales fell, while the recovery in the hospitality sector appears to have topped out.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Public Finances, March 2022

  • In one line: The estimate of 2021/22 borrowing will be revised down in time, much closer to the OBR’s forecast.

Samuel Tombs (UK Economist)U.K.

27 Apr 2022 Public Borrowing Likely to Exceed the OBR's Forecast This Year

The estimate of public borrowing in 2021/22 almost certainly will be revised down over the coming months.

But we think public borrowing is on course to overshoot the OBR's forecast in 2022/23 and beyond.

The OBR's assumption that productivity will grow at double the pace seen in the 2010s is implausible.

Samuel Tombs (UK Economist)U.K.

26 Apr 2022 The PMI Turned Down in April, but is Still too Upbeat on Q2 GDP Growth

The composite PMI points to solid quarter-on-quarter GDP growth of 0.7% in Q2, despite falling in April.

The PMI, however, likely is too upbeat; it excludes government expenditure and retail sales, which are falling.

It might also be too strong when turnover is being lifted by price rises; we still expect GDP to drop in Q2.

Gabriella DickensU.K.

22 Apr 2022 Which of the Conflicting Indicators of Employment Should Be Believed?

The upward trend in the PAYE measure of employees is more plausible than the flat trend presented by the LFS.

Very strong survey indicators might reflect rising average hours and likely are insensitive to rising quits.

Employment growth looks set to slow from Q2, due to the rise in NICs and weaker demand.

Gabriella DickensU.K.

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