Circular Flow of Income and the Impact of Covid-19 on UK SMEs

Circular flow of income

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Challenges that impacted on internal and external factors of UK SMEs.............................1
Identifying the role of UK government providing support SMEs during the covid 19 pandemic
................................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES ...............................................................................................................................6

INTRODUCTION
The circular flow of income is the process of exchange of economy, goods and services
among the population. The circular flow of income generate the model of the macro-economy
and identifying the national income, outcomes and expenditure created overtime. Coronavirus
pandemic affects the economy in UK most affected SMEs on both supplier and producer. The
effect of Covid-19 on the performance of SMEs across the UK massive. Overall, UK economy
falls down due to the Covid-19 effects and the most effected sectors are agriculture and
construction these sectors causes reduction in revenue. Companies faces decrement in supply of
workforce labour because people was unwell and restricted. UK organization faces sudden loss
of demand and revenue for SMEs most severely affected the productivity and causes the
shortage. Additionally, this essay covers the challenges which affects the internal factors of
SMEs and identifying the role of UK government providing support to small and medium
enterprises during the coronavirus pandemic (McDowell and et. al., 2018).
MAIN BODY
Challenges that impacted on internal and external factors of UK SMEs
During the coronavirus pandemic effected large scale of loss of small and medium
business and the human being suffering all over the UK. It has major impact on public health,
which as also generated large economic crisis in the united Kingdom. Small and medium
business enterprises faces revenue loss due to the highly spread of coronavirus and government
restricted so people do not come outside and this situation more severe drops in capacity
utilisation. Manufacturer faces many difficulties shortage of workforce labour which leads to
shortage of interrupted supply chain. Consumers experiences loss of income and fear of health
treatment which impacts on personal living standard of individual, people reduce consumption
and spending on the goods and services. Tourism and transportation also affected and
contributed to reduction in businesses and consumer confidence. These various impacts was
affecting both small and medium business (Martínez-Román and et. al., 2019).
There are various organization which was permanently closed and faces the loss due to
the closure of market and restriction of government. The major effects of coronavirus pandemic
on people is unemployment. The pandemic has disrupted many business in UK due to partial or
completely lock down. Due to the these effects the supply chain which reduced the production
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