What would be the effect on the UK Economy of an increase in the Bank of England Base Rate?

AD=C+I+G+X-M1) Increased cost of borrowing-ConsumptionVariable rate mortgages will now have higher monthly interestrepayments. This leads to a decrease in disposable income for consumers.Consumers will therefore spend less and so consumption will decrease leading toa downward shift in the AD curve. This will reduce economic growth and reduceinflationary pressure.2) Increased cost of borrowing-InvestmentFirms apply for loans from banks in order to the fund expansion of their businesses. This is called investment. Firms only invest if the return of the investment is higher than the cost of the interest on the loan that has to be taken to pay for the investment. A higher base rate means banks increase the interest rate on their loans. This means that investments that were profitable are no longer and investment falls. This leads to a leftward shift in the AD function.3) SavingsConsumers save any money they don’t spend. If the interest rate increases, then the opportunity cost of spending increases. Consumers will then spend less and save more which decreases consumption. This again leads to a leftward shift in the AD function.4) Balance of PaymentsA higher interest rate for the pound would incentivise foreign investors to save their ‘Hot Money’ in UK banks as the relative return is now higher. To invest in UK banks, one needs to save pounds. Therefore, the demand for pounds increases leading to an appreciation in the value of the pound. This leads to exports being less price competitive as foreign buyers have to spend more foreign currency to buy one pound. Therefore, exports fall leading to a leftward shift of the AD function. The opposite happens with imports.