Policy doesn’t remove pressure. It moves it.
Scenario Flow Map
Actor tiles show scenario impact. Pipes show booked flows at the selected theory and quarter.
Policy doesn't remove pressure. It moves it. Pipes are booked flows; gauges are pressure not yet paid. Click any actor to see what they relieve and what they absorb.
Central Bank sets the rate
Books balance
No pipe without a transaction. No gauge pretending to be cash.
Pressure Map
Tip: click any row to inspect the paying actor. Every line is a booked ledger flow; bar heaviness shows relative intensity (red end pays, green end receives).
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.
Balanced does not mean harmless: ledger flows net to zero because payments are received somewhere else.
Distributional Tilt
Household / company / service pressure
Blended household: mortgagors, renters, savers and low-income households differ.
Public-sector fiscal pressure
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.
Share of each teaching £1 of pressure that lands as a real cash flow. Ledger items must balance across the system.
Share of each teaching £1 of pressure that shows up as a price revaluation.
Share of each teaching £1 of pressure that builds as a teaching signal (risk, confidence, capacity).
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.
Cause & effect, not forecast. PolicyLever uses a £1 teaching unit — it shows direction, flow, leakage and redistribution per £1 of lever pressure. It is not a forecast of the real economy unless you deliberately apply a scale. · View baseline details
Display scale
PolicyLever is a £1 teaching engine. Scale changes the display size, not the underlying teaching mechanics.
The biggest driver right now is Bank Rate. In the ledger, that pressure pushes money out of Households and into Commercial Banks. The theory layer (Monetary Stabilisation) then decides whether that pressure fades, compounds or shifts elsewhere over the next quarters — the Q1 ledger above does not change.
PolicyLever shows ledger-backed flows, valuation effects and pressure gauges. It is a teaching model, not a forecast.
Rate transmission · GAUGE
What households & companies actually face when borrowing. Not a cash flow — a teaching gauge.
Effective borrowing rate
+275 bps
Bank Rate
+250 bps
Term premium (QE/QT)
0 bps
Credit spread
+25 bps
Tightening: QT + spread widening — borrowing is more expensive than Bank Rate alone implies.
Market signals · GAUGE
Derived feedback channels — not cash flows, not bookings. Teaching proxies for what markets would price.
QE → real credit
28%
Pass-through · £0.00 of QE reaches household credit
High Bank Rate makes banks prefer holding reserves at IOR rather than lending.
Sterling drift
+1.00%
Endogenous +1.00% · manual 0%
Higher Bank Rate → stronger £. QE → weaker £. Manual shock adds on top.
Implied Bank Rate path
-17 bps
CPI gauge 1.3% vs 2% target
Where markets would price the next Bank Rate move given the CPI gap. Not an automatic change.
Economy narrative
Plain-English summary of the whole-economy effect per £1 of pressure.
Each lever is normalised to £1 of pressure. The numbers below show how that £1 redistributes across actors — e.g. "£0.35 of each £1 rate shock lands as household mortgage pressure". Weights are teaching assumptions, not empirical forecasts. Switch the scale above to view the same proportions at £1,000 / £1m / £1bn.
This is why PolicyLever separates: money flows from market-value changes and pressure signals. That matters: not every economic effect is cash moving today.
Inequality lens · 12-quarter horizon
Same decision, repeated each quarter. Pockets that keep filling (or keep draining) reveal where structural pressure concentrates.
| Actor | Cash flows in | Cash flows out | Net pocket |
|---|---|---|---|
6 payers · 1 receiver | ▲ Heavy£1.00 Every quarter (12/12) | ▼ Light£0.08 Every quarter (12/12) | Net receiver +£0.92 |
1 payer | ▲ Light£0.06 Every quarter (12/12) | — | Net receiver +£0.06 |
1 payer · 1 receiver | ▲ Trace£0.04 Every quarter (12/12) | ▼ Light£0.06 Every quarter (12/12) | Net payer −£0.01 |
1 receiver | — | ▼ Trace£0.04 Every quarter (12/12) | Net payer −£0.04 |
1 receiver | — | ▼ Light£0.17 Every quarter (12/12) | Net payer −£0.17 |
3 receivers | — | ▼ Light£0.18 Every quarter (12/12) | Net payer −£0.18 |
1 receiver | — | ▼ Light£0.23 Every quarter (12/12) | Net payer −£0.23 |
1 payer · 1 receiver | ▲ Light£0.08 Every quarter (12/12) | ▼ Moderate£0.42 Every quarter (12/12) | Net payer −£0.34 |
Frequency counts how many of the 12 quarters each actor was on the receiving or paying end. Intensity bars show share of the horizon's total flow. Structural inequality lives in the pockets that fill — or drain — every single period.
Companies cut planned investment
GAUGEPressure indicator, not a cash flowPressure
Moderate
Higher rates reduce planned investment. Shown as a counterfactual drag on fixed-asset growth, not a realised payment to another actor.
Counterfactual drag on fixed-asset growth · Does not create a pipe.
Gilt market-value pressure
VALUATIONPrice change, not a cash paymentPressure
Heavy
Rising yields lower the market value of existing gilts for holders. In this five-actor teaching model, this is shown as market pressure rather than a direct reduction in government cash.
Market-pressure indicator on holders · Shown separately from the balance sheet.
Local-government service pressure
GAUGEPressure indicator, not a cash flowPressure
Light
Cost and demand pressure on local services. Shown as a gauge because it is not itself a cash flow until funded through grants, council tax, borrowing, reserves or service reductions.
Shown separately from the balance sheet.
Pension gilt market-value pressure
GAUGEPressure indicator, not a cash flowPressure
Strong
Rising yields put market-value pressure on gilt holdings. Shown as a gauge in this phase rather than reducing book values automatically.
Shown separately from the balance sheet.
Pension funding-ratio gauge
GAUGEPressure indicator, not a cash flowPressure
Moderate
Higher discount rates may improve funding ratios by reducing the present value of liabilities. Shown as a gauge, not a cash flow.
Shown separately from the balance sheet.
Foreign gilt demand lower
GAUGEPressure indicator, not a cash flowPressure
Moderate
Reduced foreign demand for gilts under higher yield/risk pressure. Shown as financing pressure, not a realised cash flow, unless an actual gilt sale/purchase transaction is modelled.
Shown separately from the balance sheet.
External financing pressure
GAUGEPressure indicator, not a cash flowPressure
Moderate
Tighter external funding conditions for the UK. Shown as a gauge, not a cash flow.
Shown separately from the balance sheet.
Selected school · Monetary Stabilisation
A credible central bank is the main stabiliser. Use rates to cool inflation, and as inflation falls the pain eases and conditions normalise within a few quarters.
The Q1 ledger does not change when you switch theory. Only the Q2–Q12 path changes.
Mechanics vs Theory-shaped path
Left column: the booked Q0 ledger truth. Right column (Q2–Q12) is a theory-shaped path, not a forecast — the same £1 re-weighted through each school's beliefs and the timing family each effect belongs to (fast market, cashflow pass-through, fiscal rollover, real economy).
Theoretical lens
At Q1, all four schools agree — this is the booked mechanical impact. Slide the Theory horizon forward to watch them diverge.
In plain English
A credible central bank is the main stabiliser. Use rates to cool inflation, and as inflation falls the pain eases and conditions normalise within a few quarters.
Core belief
Inflation and demand are stabilised mainly through credible interest-rate policy. Rate pain is expected to ease as inflation falls and policy normalises.
Policy move
Use rates as the main stabiliser; avoid fiscal policy working against monetary policy.
Real-world example
How most modern central banks (Bank of England, Fed, ECB) frame their job. Think Volcker breaking 1980s US inflation, or the Bank of England's 2022–24 tightening cycle.
Expects: Inflation and demand are stabilised mainly through credible interest-rate policy. Rate pain is expected to ease as inflation falls and policy normalises.
Caveat: Assumes inflation expectations are well-anchored and the transmission channel works on schedule.
| Actor | Q0 · MechanicsLedger truth | Q1 · Monetary StabilisationTheoretical | Δ vs Q0 | × | Drift |
|---|---|---|---|---|---|
| LEDGERCommercial Banks | +£0.24 | +£0.22 | −9.8% | 0.90 | Gain fades |
| LEDGERHouseholds | −£0.12 | −£0.10 | −16.4% | 0.84 | Pain fades |
| LEDGERGovernment / Gilts | −£0.07 | −£0.06 | −3.5% | 0.97 | Pain fades |
| LEDGERCompanies | −£0.06 | −£0.05 | −14.2% | 0.86 | Pain fades |
| LEDGERRest of World | +£0.02 | +£0.02 | +0.0% | 1.00 | Mechanics hold |
| LEDGERLocal Government | −£0.01 | −£0.01 | −4.6% | 0.95 | Pain fades |
| LEDGERCentral Bank | −£0.01 | −£0.01 | +0.0% | 1.00 | Mechanics hold |
✓ The books reconcile.
18 ledger transactions booked across 10 actors. Every pound that left one balance sheet arrived on another — that is the accounting proof behind the simulator. (Gauges and valuations are excluded from this conservation check by design.)
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Cash at Treasury (operational) | £0.00 | £0.01 | +£0.01 |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| Reserves issued (liability to banks) | £0.50 | £0.52 | +£0.02 |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Retained earnings (period) | £0.00 | £-0.01 | −£0.01 |
| Central bank equity | £-0.50 | £-0.50 | — |
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Reserves at central bank | £0.50 | £0.82 | +£0.33 |
| Customer loans | £2.00 | £2.00 | — |
| Gilts held | £0.30 | £0.30 | — |
| Cash | £0.10 | £0.10 | — |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| Collateral received | £0.00 | £0.08 | +£0.08 |
| Customer deposits | £2.50 | £2.50 | — |
| Wholesale funding | £0.30 | £0.30 | — |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Retained earnings (period) | £0.00 | £0.24 | +£0.24 |
| Bank equity | £0.10 | £0.10 | — |
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Bank deposits | £0.40 | £0.28 | −£0.12 |
| Housing assets | £2.00 | £2.00 | — |
| Pension claims | £0.80 | £0.80 | — |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| Mortgages | £1.20 | £1.20 | — |
| Consumer credit | £0.20 | £0.20 | — |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Retained earnings (period) | £0.00 | £-0.12 | −£0.12 |
| Household net worth | £1.80 | £1.80 | — |
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Cash | £0.25 | £0.19 | −£0.06 |
| Trade debtors | £0.16 | £0.16 | — |
| Stock / inventory | £0.10 | £0.10 | — |
| Fixed assets | £0.09 | £0.09 | — |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| Trade creditors | £0.23 | £0.23 | — |
| Loans | £0.11 | £0.11 | — |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Retained earnings (period) | £0.00 | £-0.06 | −£0.06 |
| Share capital | £0.10 | £0.10 | — |
| Retained profit | £0.16 | £0.16 | — |
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Cash | £0.20 | £0.14 | −£0.07 |
| Tax receivable | £0.30 | £0.30 | — |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| Gilts outstanding | £2.50 | £2.50 | — |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Retained earnings (period) | £0.00 | £-0.07 | −£0.07 |
| Public sector net position | £-2.00 | £-2.00 | — |
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Reserves | £0.10 | £0.09 | −£0.01 |
| Cash | £0.05 | £0.04 | −£0.01 |
| Fixed assets | £0.85 | £0.85 | — |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| Borrowing (PWLB) | £0.40 | £0.40 | — |
| Service obligations | £0.10 | £0.10 | — |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Retained earnings (period) | £0.00 | £-0.01 | −£0.01 |
| Local public equity | £0.50 | £0.50 | — |
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Derivative collateral posted | £0.00 | £0.08 | +£0.08 |
| Cash | £0.10 | £0.06 | −£0.04 |
| Liquid assets | £0.30 | £0.26 | −£0.04 |
| Gilt holdings | £0.80 | £0.80 | — |
| Other investments | £0.80 | £0.80 | — |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| Pension liabilities | £1.80 | £1.80 | — |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Funding position | £0.20 | £0.20 | — |
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Sterling deposits | £0.10 | £0.12 | +£0.02 |
| Cash | £0.20 | £0.20 | — |
| UK gilts held | £0.60 | £0.60 | — |
| UK loans held | £0.20 | £0.20 | — |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| UK claims on Rest of World | £0.40 | £0.40 | — |
| External payables | £0.20 | £0.20 | — |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Retained earnings (period) | £0.00 | £0.02 | +£0.02 |
| External net position | £0.50 | £0.50 | — |
Assets
| Account | Before | After | Δ |
|---|---|---|---|
| Cash | £0.08 | £0.08 | — |
| Receivables | £0.12 | £0.12 | — |
| Energy supply assets | £0.60 | £0.60 | — |
Liabilities
| Account | Before | After | Δ |
|---|---|---|---|
| Payables to Rest of World | £0.20 | £0.20 | — |
| Energy supplier debt | £0.25 | £0.25 | — |
Equity
| Account | Before | After | Δ |
|---|---|---|---|
| Energy sector equity | £0.35 | £0.35 | — |
Not every number in PolicyLever is money moving.
Some are ledger flows, some are valuation changes, and some are pressure gauges. This is deliberate — and every output below carries a badge so you can tell them apart at a glance.
PolicyLever shows ledger-backed flows, valuation effects and pressure gauges. It is a teaching model, not a forecast.