The price of money rises.
Pressure · Borrowers and debt-heavy firms.
Inequality tilt · Debt and weak buffers feel the squeeze before cash does.
Bank rate ↑25bps · 0.00% → 0.25%
What changed · Mostly fixed mortgages · borrower cashflow exposure is back-loaded; refinancing cliffs matter later.
Bank rate ↑25bps · 0.00% → 0.25% — borrowing gets more expensive; some households and firms feel it sooner than others.
£1 of first-round pressure · engine-adjusted allocation
Pence remain qualitative weights. The engine shifts emphasis when assumptions change; this is not a forecast or money flow.
Think of the £1 as a spotlight: bigger shares show where the shock lands hardest under these assumptions — not money received.
What changed · mostly fixed mortgages · strong household buffers · slow bank pass-through → Household borrowers -15p (base 45p); Financial markets +15p (base 10p).
Household borrowersadjusted -15p30p
base: 45p
Mostly fixed mortgages — Q0 household cashflow exposure is back-loaded; refinancing cliffs matter later, not now. Strong household buffers — immediate household stress slightly absorbed.
Business borrowers20p
Floating-rate corporate debt reprices quickly; smaller firms feel it first. Pressure share, not money received.
Banks · marginadjusted +5p20p
base: 15p
Slow pass-through — bank net interest margin widens for longer.
Savers · partial offsetadjusted -5p5p
base: 10p
Slow bank pass-through — deposit relief delayed; saver offset shrinks.
Financial marketsadjusted +15p25p
base: 10p
Mostly fixed mortgages — signalling and curve repricing carry more of the Q0 work. Strong buffers — more of Q0 sits in market and signalling channels rather than household cashflow.
Where did the £1 go?
Teaching £1 composition: share of each £1 of pressure within its class. Values never exceed 100p.
Teaching assumptions, not empirical forecasts.
Note on central-bank flows: Bank Rate interest paid by the central bank to commercial banks, and any APF indemnity from Treasury that funds it, are sequential legs of the same Bank Rate operating cost of the central-bank balance sheet — not two independent public costs.
Pressure created by each lever
scenario totals, gross LEDGER- Bank Rate52p pressure created↳ 48p received elsewhereLedger balances
Balanced does not mean harmless: ledger flows net to zero because payments are received somewhere else.
Distributional Tilt
Asset-holder benefit · household / company pressure
- +5p
Household / company / service pressure
Blended household: mortgagors, renters, savers and low-income households differ.
- —
Public-sector fiscal pressure
- −6p
Asset-holder income (cash)
Institutional asset holders: effects may pass through to pension members and policyholders over time, not as direct household cash.
- —
Asset-holder valuation (mark-to-market)
Valuation pressure on gilt / asset holdings. Not cash today.
- —
External — trade leakage
Cash paid abroad for imports (e.g. energy).
- —
External — financial (coupons / interest)
- —
Asset-swap / liquidity shift
QE / QT exchange cash for gilts (or vice versa). The cash leg is shown; the gilt leg of equal size is not a gain or loss.
Central-bank flows are system bookkeeping and excluded from the tilt. Buckets read from canonical LEDGER / VALUATION rows; QE/QT cash legs are reported as asset-swap, not as ordinary income or leakage.
Money flows — teaching £1 split
Share of each teaching £1 of pressure that lands as a real cash flow. Ledger items must balance across the system.
- Bank net money in(gross +4p / −25p)+21p
- Household net money out(gross +14p / −4p)−11p
- Government net money out−11p
- Company net money out−7p
- Central bank net money out(gross +4p / −4p)−0p
- Rest of world net money in+4p
Valuation effects — teaching £1 split
Share of each teaching £1 of pressure that shows up as a price revaluation.
- Pensions & insurers net pressure+11p
Pressure gauges — teaching £1 split
Share of each teaching £1 of pressure that builds as a teaching signal (risk, confidence, capacity).
- Company net pressure+7p
- Pensions & insurers net pressure+4p
- Rest of world net pressure+4p
Only ledger items have to balance. Valuations and gauges show pressure, risk or market movement. Values shown are composition share of £1. In the default teaching split, each Money-flows row equals the share of £1 shown on the matching Flow Map actor tile.