How DEFINE-UK works, and how we run it.

Accounting before theory

DEFINE-UK is an ecological stock-flow consistent (E-SFC) model: DEFINE-UK 1.1, April 2026, by George, Dafermos, Nikolaidi and co-authors (define-model.org). Stock-flow consistency is an accounting discipline before it is an economic theory. Every monetary flow in the model — wages, taxes, interest, dividends, lending — leaves one sector's account and enters another's, so a transactions matrix sums to zero in every row and column; and every flow accumulates into a stock, so sector balance sheets close each period. Nothing appears from nowhere and nothing leaks out.

The ecological coupling

The ecological part couples that closed monetary accounting to an emissions and energy block, so climate policy and the financial system move together in one system. An emissions block splits electricity from non-electricity emissions; the components sum exactly to the total in the model's output.

The sectors

Households, firms, monetary financial institutions (MFIs), non-monetary financial institutions, government, the central bank, and the rest of the world — each with a full balance sheet. The balance-sheet matrix (manual §2.2 Table 2) mirrors the transactions matrix: every financial instrument row sums to zero — one sector's asset is another's liability — and each sector's column sums to its net worth.

Calibration

The model is calibrated to UK national accounting data (ONS Blue Book / UKEA), with the manual's §5 tables giving parameters and initial values.

Housing

Two structural blocks distinguish DEFINE-UK from a generic E-SFC model. The housing block tracks the UK housing stock by energy efficiency, so retrofit policy — subsidies and regulation — changes household energy demand and emissions through the stock, not through a reduced-form elasticity.

Power

The power-sector block carries separate fossil and renewable capital stocks: government renewable investment is triggered when non-fossil capacity falls short of a utilisation threshold relative to electricity demand, and regulation policies (new in version 1.1) can directly depreciate fossil capital — stranded assets as an explicit balance-sheet event, felt by the financial institutions that hold the claims.

What version 1.1 added

Version 1.1 (April 2026) added regulatory policies, limited forward-looking behaviour to policy announcements, direct government ownership of non-fossil power capital, and a green sovereign bond instrument.

The closure

DEFINE-UK is closed demand-led: output adjusts to aggregate demand rather than being pinned to a supply-side potential path. That is the standard post-Keynesian SFC closure, and it has a direct, observable consequence — fiscal expansions are not crowded out by an assumed return to potential, so fiscal multipliers come out larger than in supply-constrained models like the OBR emulator.

Measured, not asserted

We measure this rather than assert it: our own computation of the model's cumulative green-public-investment multiplier is 1.78, against IMF green-spending estimates of 1.1–1.5 and an OBR capital-spending impact multiplier of ≈1.0. Above the official range, but explicably so given the closure — and every surface that quotes a DEFINE-UK delta carries the demand-led caveat. The full comparison is on the validation page.

Switch sets on the baseline

Each of the 22 published scenarios is implemented as a set of policy switches on the baseline: a fossil-fuel ban toggles the ban flag with its capacity and investment timings; the power subsidy toggles POWER_SUB alone; green public investment toggles GVT_INVEST, GREEN_BONDS and GREEN_POWER; the housing-subsidy variant pins the published 40% subsidy rate (HOUSING_SUB_RATE=0.4). The scenario blocks cover power-sector regulation under five expectation regimes, housing regulation, green public investment, and mixed packages.

Verifying the switches

Because no numeric scenario results are published for v1.1, the switch sets themselves are part of our validation surface: a design gate verifies that each cached scenario toggles exactly the policy switches its published description claims — no more, no fewer. What that gate does and does not establish is spelled out on the validation page.

The constraint

The upstream repository (github.com/DEFINE-model/DEFINE_UK_1.1) is public but carries no licence. That constraint shapes the entire architecture. The adapter fetches the upstream R code at commit 846081a at run time and executes it unmodified, in R. Nothing upstream is vendored, redistributed, or hosted. A full notebook run (R 4.3.0, 151 output files across all four scenario blocks) is cached; the scenario surface reads from that pinned run rather than re-running the model per query.

Deltas only, local only

pe-macro define-scenarios and pe-macro define-scenario return annualised scenario-minus-baseline delta paths only, framed with mandatory caveats — never levels, because the baseline's calibration gap to ONS/DESNZ/OBR actuals is computed and material. The hosted MCP tools return run instructions instead of results, because the unlicensed upstream is never hosted. score_reform will not accept this model.

The clean-room path to hosting

The path to hosting is a clean-room Python reimplementation of the published Model Manual — the same adapted-model approach as the OBR emulator. The protocol: the manual is the specification, and the upstream run is a numerical oracle only — its outputs are compared against ours, but its source code is never read to write equations, and every equation must carry a reference to the manual section and equation number it implements. Five milestones run from the accounting core to the full policy scenarios; milestone 1 — the §2.2 transactions and balance-sheet matrices on the §5 initial values — passed with 27 identity tests, including one documented inconsistency in the manual itself (Table 6 omits a dividend term of Eq. 383 from the interbank-lending row, which the tests pin exactly rather than paper over).