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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surveys

5 July 2022 Forecast Review: The Inflation Roller Coaster has Become Even Steeper

The MPC and consensus still aren't downbeat enough on Q2 GDP; we look for a 0.7% quarter-on-quarter drop.

CPI inflation now looks set to approach 11% in October, driven by further huge rises in food and energy prices...

...But wage growth and inflation expectations haven’t risen, while producer price inflation now is set to plunge.

Samuel Tombs (UK Economist)U.K.

1 July 2022 Most of Q1's Increase in GDP Likely was Reversed in Q2

The first quarter’s rise in GDP has brittle foundations; households have had to retrench in Q2.

The support to GDP growth from restocking will fade; firms now have enough inventory to meet demand.

A recession, however, isn’t likely; households’ real dis- posable incomes will rise in Q3, and capex will recover.

Samuel Tombs (UK Economist)U.K.

24 June 2022 June's Stable PMI Provides Little Reassurance on Q2 GDP

The composite PMI held steady at 53.1 in June, but it has been misleadingly upbeat in recent months.

It excludes the retail and public sectors, both of which will drag on quarter-on-quarter GDP growth in Q2.

We still forecast a 0.7% q/q drop in Q2 GDP, and only a 25bp increase in Bank Rate in August.

Gabriella DickensU.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.

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.

16 May 2022 Net Upside Risk to the MPC's 9.1% Forecast for April CPI Inflation

CPI inflation likely soared to 9.2% in April, from 7.0% in March, largely due to the jump in the energy price cap.

BRC data are consistent with another large rise in core goods prices, while services prices likely shot up too...

...In response to the hospitality VAT hike, big increases in phone contract prices, and an Easter boost to airfares.

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.

10 May Will Rising Mortgage Rates Push House Prices Down?

Monthly payments will jump by about £100 for most households who refinance mortgages this year.

Mortgage approvals will fall sharply in the second half of this year in response to higher rates.

But house prices likely will stabilise, not fall; the supply of homes coming to the market will contract too.

Samuel Tombs (UK Economist)U.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.

21 Apr 2022 Stockbuilding will Swing to Depressing GDP Growth Shortly

Firms want to hold more stocks than in the 2010s, but now are accumulating them at a slower pace.

GDP growth depends on the rate of change in inventories, so the deceleration will depress growth.

Futures prices historically have been a better guide to energy prices than assuming they don't change.

Samuel Tombs (UK Economist)U.K.

14 Apr 2022 CPI Inflation will Fall Next Year Almost as Sharply as it Has Climbed

We look for two further 25bp increases in Bank Rate this year, not one, after March's jump in CPI inflation.

CPI inflation looks set to peak at about 9% in April and remain above 8% until the very end of this year.

But energy and core goods inflation will plunge next year; the MPC needn't be as active as markets expect.

Samuel Tombs (UK Economist)U.K.

7 Apr 2022 February Data to Show the Recovery in Employment Is Back on Track

We look for a three-month-on-three-month rise in employment of about 30K in February.

Another cohort with a high employment rate left the sample, but surveys signal solid underlying momentum.

The PAYE measure of median pay and settlements data, however, suggest wage growth stayed subdued.

Gabriella DickensU.K.

28 Feb 2022 Markets Still Overestimating the Scope for Further Rate Hikes

  • Real household disposable income is set to drop by 2.0% this year, the most since the Second World War.
  • The Chancellor likely won't come to households' res- cue; debt interest and military spending is set to jump.
  • We have nudged down our GDP forecast and now expect it to be up only 1.5% year-over-year in Q4.

Samuel Tombs (UK Economist)U.K.

24 Feb 2022 Labour Supply will Pick Up This Year, Keeping Wage Pressures in Check

  • We think that year-over-year growth in the workforce will pick up to 1.0% by the end of 2022...
  • ...Driven by the reversal of half of the rise in inactivity since early 2020, and a recovery in immigration.
  • The number of hours workers are willing to supply also will rise in response to the drop in real wages.

Samuel Tombs (UK Economist)U.K.

22 Feb 2022 The PMI Points to a Swift Recovery from Omicron and Solid Q1 Growth

  • Markit's composite PMI points to brisk GDP growth in Q1; the Omicron hit has faded quickly.
  • Other indicators, however, including the ONS' BIC survey, are less upbeat, so we expect 0.6% q/q growth.
  • Output prices in the manufacturing and services sec- tor are still surging; a March rate hike is a done deal.

Samuel Tombs (UK Economist)U.K.

17 Feb 2022 Inflation Data Bolster the Case for Rate Hikes, but not 50bp in One Go

  • January's 5.5% rate of CPI inflation only just exceeded the MPC's 5.4% forecast; the surprise was all in goods.
  • Services inflation is only slightly above its long-run average; the MPC needn't panic.
  • The headline rate likely will peak at 7.7% in April, but then fall swiftly, potentially undershooting the target in 2023.

Samuel Tombs (UK Economist)U.K.

8 Feb 2022 Surging Healthcare Activities Likely Cushioned GDP in December

  • Business surveys point to substantial damage to GDP in December from Omicron; hospitality was hit hard...
  • ...But surging Test & Trace and vaccine activities likely boosted month-to-month growth in GDP by 0.7pp.
  • We look for a 0.6% month-to-month drop in GDP, which likely will not cause the MPC to blink.

Samuel Tombs (UK Economist)U.K.

7 Feb 2022 Forecast Review: Two More Rate Hikes and the MPC Will be Done

  • We have revised up our forecast for CPI inflation again, and now expect it to peak at 7.5% in April.
  • The squeeze on real incomes is set to be intense, though savings depletion should support spending.
  • We now expect the MPC to hike Bank Rate to 0.75% in March and 1.0% in May, but then to go no further.

Samuel Tombs (UK Economist)U.K.

4 Feb 2022 MPC to Markets: Don't Get Carried Away

  • Investors think the MPC will hike Bank Rate by a further 100bp this year, leaving it at 1.5% by year-end.
  • But the MPC still expects only "modest" further hikes; Bailey was clear: "do not get carried away".
  • The MPC's forecasts for CPI inflation imply rates need to rise only 35bp more to return it to the 2% target.

Samuel Tombs and Gabriella DickensU.K.

19 Jan 2022 How Much Longer Will the Employment Miracle Last?

  • Employment has continued to rise, despite the withdrawal of the furlough scheme and the Omicron hit...
  • ...But growth will slow soon; few people who want a job don't have one, while employment taxes will rise in April.
  • Wage growth has cooled, despite the tight job market; real wages look set to fall sharply this year.

Samuel Tombs (UK Economist)U.K.

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