UK Publications
Below is a list of our UK 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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Chartbook Weekly Monitor Global Rob Wood (Chief UK Economist)
SLOWLY EASING INFLATION AND A LOOSER BUDGET...
- …THE MPC WILL CUT RATES ONCE PER QUARTER
Rob Wood (Chief UK Economist)UK
- Rachel Reeves’ loosening of fiscal rules will likely mean £24B per year more borrowing for investment.
- Markets will likely still see the new fiscal rules as credible, avoiding a ‘Liz Truss’ moment...
- ...as Chancellor Reeves’ focus on the current budget deficit shows commitment to sustainable policy.
Rob Wood (Chief UK Economist)UK
- Surprisingly strong retail sales in September suggest consumers are shrugging off Budget uncertainty.
- Weather and unfavourable seasonals hit September sales, so the trend is better than the headlines.
- Real wage growth and interest rate cuts will help consumer spending support GDP growth in H2.
Rob Wood (Chief UK Economist)UK
- GDP grew 0.2% month-to-month in August as erratic drags on July output unwound.
- Downward revisions to earlier months, however, cut our Q3 GDP forecast to 0.2% quarter-to-quarter.
- That leaves a November MPC rate cut as a racing certainty, even though growth should rebound in Q4.
Rob Wood (Chief UK Economist)UK
- BoE Governor Bailey’s Guardian interview has raised the risk of rate cuts at consecutive MPC meetings.
- We expect the MPC to cut once a quarter, but see four rate cuts in 2025 from three previously.
- We expect higher inflation than the MPC, growth remains solid and MPC guidance is for gradual cuts.
Rob Wood (Chief UK Economist)UK
- We have nudged down our Q3 GDP growth forecast to 0.3% quarter-to-quarter after GDP flatlined in July.
- We lift our 2025 inflation forecast as we add in above inflation duty hikes and private school fee rises.
- We expect a 25bp rate cut in November and three more in 2025, as the MPC guides to “gradual cuts”.
Rob Wood (Chief UK Economist)UK
- We expect payback for the 1.0% month-to-month August gain in retail sales, boosted by warm weather.
- But look through the volatile sector detail, and retail sales volumes are trending up as real wages rise.
- Consumer confidence, likely depressed by rising inflation expectations, poses a downside risk.
Rob Wood (Chief UK Economist)UK
- Better anchored inflation expectations have helped deliver a more benign disinflation than feared.
- But the MPC should retain some caution as long-run household inflation expectations are a little elevated...
- …satisfaction in the BoE remains low and households are more attentive to inflation than before Covid.
Rob Wood (Chief UK Economist)UK
- We expect the Chancellor to raise taxes by £10B per year, only partially offsetting higher spending.
- So, the OBR will likely increase its forecasts for government borrowing over the next five years.
- Ms. Reeves likely will meet her fiscal rules by changing the definition of government debt used.
Rob Wood (Chief UK Economist)UK
- Consumers and firms seem gradually to be shifting behaviour in response to expected interest rate cuts.
- Households raised liquid assets by the least in 11 months, and mortgage approvals jumped.
- Smoothing through volatility, corporates have been raising net external finance since March.
Rob Wood (Chief UK Economist)UK
REBOUNDING GROWTH AND SLOWLY EASING WAGES
- ...THE MPC WILL CUT IN NOVEMBER AND THREE TIMES IN 2025
Rob Wood (Chief UK Economist)UK
- Retail sales volumes gained 0.5% month-to-month in July but were depressed by a large seasonal factor.
- We estimate that retail sales volumes are trending up at a 2.5% month-to-month annualised pace.
- Surveys and consumer confidence signal improving retail sales, while rate cuts will give a boost.
Rob Wood (Chief UK Economist)UK
- House prices have almost recovered their losses since October 2022.
- House-price inflation is now trending up at nearly 3% month-to-month annualised.
- We think that house prices will rise 4% year-over-year by Q4 2024 as mortgage interest rates fall.
Rob Wood (Chief UK Economist)UK
- We expect GDP to be unchanged month-to-month in June, as retail sales and doctors’ strikes hit output.
- That would leave Q2 GDP up 0.6% quarter-to-quarter, just below the MPC’s new forecast.
- We think recent growth reflects stronger underlying momentum than the MPC assumes.
Rob Wood (Chief UK Economist)UK
WAGES AND SERVICES INFLATION REMAIN ELEVATED
- ...BUT THE MPC WILL CUT IN SEPTEMBER, IF NOT IN AUGUST
Rob Wood (Chief UK Economist)UK
- GDP growth continues to outperform consensus estimates and MPC projections.
- Services inflation remains elevated and is overshooting forecasts by a widening margin.
- We think the MPC will wait and cut Bank Rate in September, but it is a very close call.
Rob Wood (Chief UK Economist)UK
- Cooler weather in June led to a 1.2% month-to-month fall in retail sales volumes.
- We think the ONS data exaggerate the drop in retail sales because surveys suggest a stronger reading.
- The new government will likely borrow £10B-to-£20B a year more and raise taxes to fund more spending.
Rob Wood (Chief UK Economist)UK
- We raise our forecast for year-over-year GDP growth in 2025 to 1.6%, from 1.4% previously.
- Strong GDP growth so far this year suggests that the drag from interest rate hikes is fading.
- A 3.2% rise in household real income in 2024 will power GDP gains of 0.4% quarter-to-quarter in H2.
Rob Wood (Chief UK Economist)UK
- Keir Starmers’ huge majority will allow him to quickly enact supply side reforms, starting with planning.
- We expect an Autumn Budget to boost government borrowing £10-£20B a year.
- The MPC will still cut rates in September, but they will reduce rates only gradually after that.
Rob Wood (Chief UK Economist)UK
- Q1 GDP growth was raised to 0.7% quarter-to quarter, and the expansion was broad-based.
- We expect GDP growth of 0.4% quarter-to-quarter in Q2, and 0.3% in Q3 and Q4...
- ...As strong real income growth and stabilising saving boost consumer spending.
Rob Wood (Chief UK Economist)UK
