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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services

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.

UK Datanote: U.K. S&P Global/CIPS Construction Survey, July 2022

  • In one line: Resilience of order books suggests sector still some way from recession.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. S&P Global/CIPS Services Survey, July 2022

  • In one line: Underlying trend in output likely flat, despite the resilience of the PMI.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. S&P Global/CIPS Manufacturing Survey, July 2022

  • In one line: The mix of falling demand and high stock levels points to lower production and falling output price inflation.

Samuel Tombs (UK Economist)U.K.

2 Aug 2022 UK Monitor Forecast Review: Fiscal Policy and Lower Saving Likely to Avert Recession

We have revised up our forecast for Q4 CPI inflation by 1.0pp since early July; energy prices have surged again.

But we have revised down our forecast for the level of GDP by only 0.5pp in Q4; fiscal policy will respond.

People also have shown more willingness to deplete savings; we still expect a recession to be narrowly avoided.

Samuel Tombs (UK Economist)U.K.

1 Aug 2022 UK Monitor Will a Household Saving Drawdown Keep a Winter Recession at Bay?

Households saved much less and borrowed more in Q2; real spending, therefore, likely was unchanged from Q1.

On paper, households have ample scope to reduce their saving rate further, but we see several constraints.

Some already have depleted savings, credit conditions are tightening, and deleveraging will be more attractive.

Samuel Tombs (UK Economist)U.K.

28 July 2022 UK Monitor Is Britain Really Faring Better than Other Advanced Economies?

The U.K. composite PMI in July was above the 50.0 mark, in contrast to the U.S. and the Eurozone.

We think that this strength can be largely explained by the small manufacturing sector and recent fiscal policy.

Ofgem's energy price cap will rise by a further 23% in April, if the recent surge in wholesale prices is sustained.

Samuel Tombs (UK Economist)U.K.

25 July 2022 UK Monitor PMI Data Imply no Need for the MPC to act "Forcefully" Next Week

PMI data for July show that the recovery in GDP has nearly ground to a halt and inventory is piling up.

Employment growth slowed to a 15-month low, while the pace of input and output price rises eased materially.

On balance, the latest data imply the MPC won't act "forcefully"; market pricing for August is still too high.

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.

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.

11 July 2022 GDP Likely Failed to Rebound in May after April's Drop

We think GDP held steady in May, setting up a much larger quarterly drop in Q2 than the MPC expects.

The ONS will adjust for the extra working day due to the movement of the usual late May public holiday to June.

Momentum in business services likely was offset by falls in output in the retail and hospitality sectors.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. S&P Global/CIPS Services Survey, June 2022

  • In one line: The survey’s signal of steady growth in Q2 shouldn’t be trusted.

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.

29 June 2022 Does Higher Inflation than in the Euro- zone Point to a U.K.-Specific Problem?

CPI inflation in May was 1pp higher in the U.K. than in theEurozone; Brexit hasn’t helped but isn’t the main cause.

U.K. core goods prices were depressed more by lock- downs; base effects will lower the U.K.’s rate soon.

The relative strength of U.K. services inflation is due to VAT hikes and a rise in course costs for E.U. students.

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.

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.

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.

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.

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