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.

services

25 Jan 2022 January's Lower Composite PMI won't Distract the MPC

  • The composite PMI edged down in January; other indicators signal a further month-to-month fall in GDP too.
  • The MPC, however, will be encouraged by the pick-up in the forward-looking components of Markit's survey...
  • ...and concerned by signs the labour market is continuing to tighten quickly and services inflation still is rising.

Samuel Tombs and Gabriella DickensU.K.

20 Jan 2022 The MPC will React Immediately to December's Blowout CPI Figure

  • We are bringing forward our forecast for the next two increases in Bank Rate, following December's CPI data.
  • While food, energy and goods prices are mainly to blame for high inflation, services inflation has risen too.
  • CPI inflation, however, will fall sharply in H2 and should be below target in 2023, curtailing the hiking cycle.

Samuel Tombs (UK Economist)U.K.

17 Jan 2022 The Recovery is Over; Now Comes the Hard Part

  • GDP surpassed its pre-Covid level in November, albeit with support from some unsustainable sources.
  • Omicron has temporarily set the economy back, but GDP should return to November's level by March.
  • Thereafter, however, GDP growth likely will be slow, due to the squeeze on households' disposable incomes.

Samuel Tombs (UK Economist)U.K.

14 Jan 2022 CPI inflation Likely was Stable in December, to the MPC's Relief

  • CPI inflation probably was unchanged at 5.1% in December, giving the MPC some breathing space.
  • Pick-ups in food and used car price inflation likely were offset by falls in the tobacco and clothing components.
  • The seasonal surge in plane ticket prices will boost the CPI less than usual, because its weight has shrunk.

Samuel Tombs (UK Economist)U.K.

10 Jan 2022 Above-Consensus November GDP Data Unlikely to Spur on the MPC

  • We think that GDP increased by about 0.6% month-to-month in November, above the 0.4% consensus.
  • Easing supply-chain blockages seem to have facilitat- ed pick-ups in manufacturing and construction output.
  • Growth in services output was supported by increas- es in retail sales, transport usage and vaccinations.

Samuel Tombs (UK Economist)U.K.

7 Jan 2022 Timely Indicators are Consistent with a Drop in GDP in December

  • Near-real-time indicators are broadly consistent with our forecast that GDP fell by 0.6% m/m in December.
  • OpenTable/CHAPS data signal weak pre-Christmas trading for hospitality; transport usage dipped too.
  • Omicron cases, however, should fall substantially by February, enabling GDP to begin rising again.

Gabriella DickensU.K.

UK Datanote: U.K. Markit/CIPS Services Survey, December 2021

  • In one line: Omicron weighed heavily on consumer services in December.

Samuel Tombs (UK Economist)U.K.

6 Jan 2022 What Would Government Energy Price Intervention Mean for Inflation

  • The default tariff energy price cap looks set to rise by 47% in April, pushing up CPI inflation to 6.2%.
  • The rise will be larger, if suppliers are immediately compensated for acquiring failed competitors' customers.
  • Removing VAT would limit the inflation peak to 6.0%; a supplier loan scheme could have a bigger impact.

Samuel Tombs (UK Economist)U.K.

5 Jan 2022 Lower Saving Reflects Inflation Pressure, not Reviving Confidence

  • The return of monthly saving to pre-Covid levels is a sign of the real income squeeze, not surging spending.
  • The recent surge in house prices, however, is enabling refinancing homeowners to access lower interest rates.
  • Firms continued to repay external borrowing in November, but we remain upbeat on the capex outlook.

Samuel Tombs and Gabriella DickensU.K.

4 Jan 2022 Forecast Review: Q1 GDP to be no Higher than in Q4, due to Omicron

  • Consumer caution in response to Omicron points to a near-1% fall in GDP between November and January.
  • Surging energy prices have forced us to revise up our forecast for this year's peak rate of CPI inflation to 6.0%.
  • The MPC, however, likely will wait until March to hike rates again, given the large hit to activity from Omicron

Samuel Tombs (UK Economist)U.K.

23 Dec 2021 The U.K. Economy Still is Among the Hardest-Hit in the G7

  • Quarter-on-quarter GDP growth was revised to 1.1% in Q3, from 1.3%, due to GFCF and public spending.
  • The shortfall in U.K. GDP from its pre-Covid Q4 2019 peak still is among the biggest in the G7.
  • Omicron, on top of falling households' real incomes and Brexit, will limit GDP growth in 2022.

Gabriella DickensU.K.

20 Dec 2021 A 1% Hit to GDP From Omicron is the Best Case Scenario

  • Omicron cases have leapt, but little still is known about the hospitalisation rate; new curbs aren't inevitable.
  • Even with no new restrictions and low Omicron severity, GDP likely will be 1% lower in January than in November.
  • Expect a 2% hit to GDP from a return to "Step Two" rules, and a 6% hit if a full lockdown is imposed.

Samuel Tombs (UK Economist)U.K.

17 Dec 2021 The MPC will Give the Economy Breathing Space Before Hiking Again

Markets now expect the MPC to hike Bank Rate to 0.50% in February, following today's surprise hike.

Most members, however, thought the decision was "finely balanced" and see a "modest" tightening ahead.

Omicron won't just have short-term effects if the MPC hikes again and pushes firms over the edge.

Samuel Tombs and Gabriella DickensU.K.

16 Dec 2021 Subdued Services Inflation Gives the MPC Time to Wait for Omicron

November's 5.1% CPI inflation rate was 0.6pp above the forecast made by the MPC only last month...

...But high inflation is due to surging energy and goods prices; underlying services inflation remains subdued.

We expect the headline rate to peak at 6.0% in April, but then to fall sharply, slipping below-target in 2023.

Samuel Tombs and Gabriella DickensU.K.

15 Dec 2021 Labour Market to Warrant Gradual Rate Hikes, Once Omicron Wanes

The unemployment rate continued to fall in October, despite the end of the furlough scheme.
Some full-time workers have become part-timers post-furlough, but they don't seem to want more hours.
Wage growth, however, slowed to a below-inflation rate in October; the real wage squeeze will get worse.

Samuel Tombs and Gabriella DickensU.K.

14 Dec 2021 Sterling to Continue to Slide in 2022, Hurt by the U.K.'s Covid Sensitivity

Trade-weighted sterling has fallen by about 2% since late October; bets on a further drop have intensified.
The U.K. economy is more Covid sensitive than most; the downside risk to rate expectations is greater.
Investors next year increasingly will price-in the risks of a messy outcome to the next general election.

Samuel Tombs and Gabriella DickensU.K.

13 Dec 2021 The Recovery was Fading Even Before Omicron Emerged

  • October's mere 0.1% m/m increase in GDP shows the recovery had little momentum before Omicron.
  • GDP was near its pre-Covid level only due to surging health activities; private sector GDP was 2.4% adrift.
  • A pullback in consumer services spending will depress GDP over the winter; no rate hike before March.

Samuel Tombs (UK Economist)U.K.

10 Dec 2021 Omicron Damage Likely to Delay the First MPC Rate Hike Until March

  • The MPC likely will hold back from raising Bank Rate next week, despite several upside data surprises.
  • We are cutting our forecast for quarter-on-quarter GDP growth in Q1 to 0.3%, from 0.8%, due to Omicron.
  • The Covid situation won't be better in early February; the March meeting is a better bet for the first rate hike.

Samuel Tombs (UK Economist)U.K.

9 Dec 2021 CPI Inflation Likely Exceeded the MPC's Forecast, Again, in November

  • CPI inflation likely rose to 4.8% in November—0.3pp above the MPC's forecast—from 4.2% in October.
  • Used car prices still are rising rapidly, while supermar- kets are passing on higher food prices to shoppers.
  • Tobacco prices were lifted by a duty hike, while cloth- ing CPI inflation likely was boosted by a base effect.

Samuel Tombs (UK Economist)U.K.

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.

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