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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trade balance

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.

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.

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.

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.

21 June 2022 Will Sterling Force the MPC to Stick to a Path of Rapid Rate Hikes?

OIS rates do not accurately reflect investors’ expectations for Bank Rate; a sub-2% peak wouldn’t be a shock.

The outlook for sterling is more closely tied to overall risk sentiment in markets than the outlook for U.K. rates.

Our call that rates will top out at 1.75% assumes positive supply-side developments which will boost risk appetite.

Samuel Tombs (UK Economist)U.K.

16 June 2022 The Trade Deficit is On Course to be the Largest Since the Mid-Seventies

The trade deficit was huge by past standards in April, despite narrowing to £8.5B, from £11.6B in March.

Import values have surged as fuel prices have shot up, while Brexit is continuing to weigh on exports.

We expect the largest trade deficit since the mid-70s in 2022, leaving sterling vulnerable to depreciate further.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. International Trade, April 2022

  • In one line: Deficit still set to equal the largest share of GDP since the mid-1970s.

Samuel Tombs (UK Economist)U.K.

7 June 2022 How would the Economic Outlook Change if Mr. Johnson is Dethroned?

The PM still won't be safe if he wins the confidence vote; rule changes or a recall petition could remove him.

A change of leader would raise the chances of a general election, which might weigh on business investment.

But the economic outlook will improve if a successor is constructive with the E.U. and on supply-side reforms.

Samuel Tombs (UK Economist)U.K.

17 May 2022 The Trade Deficit will Remain Large, Casting a Shadow Over Sterling

The trade deficit, excluding erratics, jumped to a recordhigh in March, largely due to the surge in energy prices.

High energy prices, surging imports of travel services and weak export growth will keep the deficit wide.

Governor Bailey is showing no signs of buckling to pressure from MPs for faster rate hikes to tame inflation.

Samuel Tombs (UK Economist)U.K.

13 May 2022 Brisk Quarterly GDP Growth Masks a Slowdown during Q1

Q1 GDP grew faster in the U.K. than overseas because consumers were shielded from higher energy prices.

Monthly data show growth slowed during Q1; falling retail sales were more than just a consumer rotation.

Falling real incomes, declining health spending and the extra bank holiday will reduce GDP in Q2.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. International Trade, March 2022

  • In one line: Another substantial underlying deficit, due to high energy prices.

Samuel Tombs (UK Economist)U.K.

25 Apr 2022 Consumers Must Draw on Savings Soon for a Recession to be Averted

March's retail sales figures were a wake-up call for investors; households are struggling to tread water.

Consumers' confidence weakened further in April and now is only a touch above its all-time low.

We still expect a recession to be avoided, but the risk will weigh on the MPC's forthcoming decisions.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. National Accounts & Balance of Payments, Q4

  • In one line: Headline GDP numbers flatter the private sector recovery.

Samuel Tombs (UK Economist)U.K.

24 Mar 2022 Incomes Still Set to be Pummelled, Despite Last-Minute Tax Changes

  • Tax and benefit changes will lop 1.3% off disposable incomes in 2022-23, despite Mr. Sunak's new tax cuts.
  • The Chancellor could have been bolder; he has more headroom against his fiscal targets than in October.
  • Don't bank on extra pre-election tax cuts; the OBR is too upbeat on households' spending and productivity.

Samuel Tombs and Gabriella DickensU.K.

15 Mar 2022 This Year's Trade Deficit will be the Largest Since the Late 1980s

  • January's record large trade deficit was not just due to erratic items; higher energy prices are partly to blame.
  • U.K. exporters also are continuing to lose market share; no reason to expect a turnaround this year.
  • Imports will continue to rise quickly, driven by higher energy prices and the recovery in outbound tourism.

Gabriella DickensU.K.

UK Datanote: U.K. International Trade, January 2022

  • In one line: Trade deficit under pressure from higher natural gas prices.

Samuel Tombs (UK Economist)U.K.

10 Mar 2022 The MPC will Hike Bank Rate Again Next Week, but Strike a Cautious Tone

  • Markets are more stressed and consumers' confidence is lower than when the MPC has hiked rates before...
  • ...But with Q1 GDP looking better than feared and inflation set to soar, a 25bp rate rise next week is very likely.
  • A 50bp hike is possible if Friday's inflation expectations data are scary, but the MPC won't want to shock now.

Samuel Tombs (UK Economist)U.K.

3 Mar 2022 Gilt Yields Now Look Sensible, After Tuesday's Plunge

  • The 28bp drop in 10-year gilt yields on Tuesday was the largest daily decline since the E.U. referendum.
  • Yields fell the most for gilts held significantly by the BoE, suggesting investors are less sure QT will begin soon.
  • Don't fret about Russia's imploding economy; it absorbs just 1% of U.K. exports and 0.3% of overseas investment.

Samuel Tombs and Gabriella DickensU.K.

1 Mar 2022 Business Investment Should Ensure GDP Remains on a Rising Path

  • We look for year-over-year growth in business investment to pick-up this year, reaching about 10% in Q4.
  • Brexit and Covid uncertainty has faded, profit margins are healthy, and firms have excess cash.
  • Higher oil prices will boost capex in the North Sea and in energy efficiency, but higher rates will hurt some firms.

Samuel Tombs (UK Economist)U.K.

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U.K. Document Vault, Pantheon Macro, Pantheon Macroeconomics, independent macro research, independent research, ian shepherdson, economic intelligence