Contemporary Business Environment: Impact of Lockdown, Government Response, Bank of England and Brexit on UK Economy

This report analyses the impact of lockdown, government response, Bank of England and Brexit on the UK economy. It discusses the circular flow of income, major economic responses, and implications of Bank of England. It also highlights the likely impacts of Brexit on the UK economy.

Contemporary
Business Environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY .................................................................................................................................3
Explain the main impact of lock-down on economy of UK by using circular flow of income.. 3
What are the major economic response of UK 's government and its impact on UK's circular
flow of income. ..........................................................................................................................4
Illustrate major response of Bank of England and its implication of circular flow of money in
UK. .............................................................................................................................................7
What are the factors likely impacts of Brexit on economy of UK..............................................8
CONCLUSION ...............................................................................................................................9
RECOMMENDATIONS ................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Contemporary business defined as the circumstances and the ideas of current time of the
business environment and that is known as the modern business. It studies that financial
organisational. Market-related & environmental concern which is being faced by the company
and this encompasses the subject of scarcity, distribution and the consumption of goods and
services(Arunprasad and et. al., 2022). Due to huge impact of COVID-19 & the Brexit, the
economy of UK have majorly impacted and influence the overall working of the employees. This
respective report, the influence of pandemic on economy of UK & also analyse the government
have taken the various response to it will further discussed. Moreover, the focus paid on aspects
taken by Bank of England in context to the Covid-19 and also analyse the implications on UK
economy. Lastly, this respective report analyse the immediate and the future impacts of Brexit on
economic aspects of the nation.
MAIN BODY
Explain the main impact of lock-down on UK economy by using circular flow of income.
There is the huge infleuce of COVID-19 on the overall economy of United Nation and
there in many ways. Lock-down restrictions within nation and this has caused the shutdown of
many business, unemployment and the downfall in the GDP, decreasing in the importing and the
exporting of goods and services. There are various sectors which includes the hospitality sector,
tourism sector which is being impacted by COVID-19 restrictions is being impacted by them.
The low demand and supply of given goods leads to get results into less utilization of
capital and the labour so that it leads to reduce the capital income also leads to minimise the
profitability in various sector and the companies. When there is reduction in the existing capital
expenditure of the business then the uncertainty is being occurred. During the pandemic
scenario, this was analysed by the Office For Budget responsibility by which the GDP can fall up
to 35% and on other hand, national Institute of Economic and Social Research is being analysed
to fall-down between 15-25%.
Furlough employees will be classified as the remaining in employment when the working
hours of them become zero. This is being analysed in which there might be an better influence on
the employment of UK and unemployment rate. It is also affected that the COVID-19 affect the
gross trade flows which reduces the level of external demand & any minimisation in the

demands' trade intensity. In order to fight with the pandemic & concern for the economy, the
government had spend funds by which the that the of money which is incurred I taxes that it
leads to reduce and resulted in the borrowing of money.
In the month of April 2020, the overall borrowing of the country is approx. £299 billion
that was huge amount that the nation has borrowed since 1946 and it is also estimated that the
debt of the country is approximately £2trillion(Covid-19 drives UK national debt to £2tn for
first time, 2021). As per the report of Office for National Statistics, the net debt of general public
sector also raised by £2,004 billion and it is being estimated in the month of July which is
estimated from £227.6 billion over the past years that is raised the overall debt by 100.5% of
gross domestic products.
The lock-down restrictions has the great impact on business in UK. The hospitality sector
had a great lost almost 660, 000 jobs in the year of 2020. As per the National Statistics stated in
their continuous update which one in seven ventures are supported to have huge loose in the last
2 weeks of October. It is also estimated that the 22% of the overall working people has been
furlough as of this global pandemic. 73% of were from lodging & food services where 46% and
on other hand, from construction industry.
What are the main response of UK 's government on economy and its impact on UK's circular
flow of income.
There is the continuous rise in the Covid-19 cases in the United Kingdom during the
second wave after fighting with the first wave. As the government of UK have implemented the
certain restrictions that includes the social distancing, restriction on travelling, shut-down in
entrainment industry and essential shops and hospitality industry and the increasing testing of
Covid-19(Caldwell and Akintunde, 2022). In context to 2020, the overall economy of UK was
shrunk is approximately by 9.8%. there is the huge decline in the household consumption and the
business environment even through the regulatory bodies has taken the measures to support the
overall economy. Moreover, the government has implemented tax and spending measures so that
they can support the families that are:
 There are further actions which support the business and also includes the holidays,
payment ofr sick leaves and grant for the small ventures.
 In universal credit, the scheme by expanding the payment of vulnerable individual.
 With the help of charitable trust, funding for NHS and public services.

The government also announced loan scheme which are namely British Business Bank,
covid-29 large huge interruption loan scheme which support the business in nation. AS the main
concern of this scheme is to create jobs was announced in the month of July, 2020 that also
involves the offering £1,000 as per the furlough employees to the company and also giving lower
payment for six months for 25 hours per week to new workers. At the time of global pademic,
the government bodies also launch new measures in the month of November 2020 that also
includes the overall retention of coronavirus job retention scheme till the end of 2021, during the
rise for granting for self-employment, the expanding the date for the loan and income support
scheme which is being guaranteed by the government until January, 2021. Moreover, the bank
also reduce the rate which were 0.1% and the expanding of Central bank's holdings in UK,
government bonds also the non-financial business bonds by £450 billion. There are various other
measures that includes the Furlough scheme, Bounce bank and the rise of universal credit, tax
payment referrals, eat out help out scheme & retention of jobs of the employees, self-
employment income support scheme & Mortgage holidays launched by the government durng
the global pandemic so that they can recover the economy out of which, there are some of the
aspects that are given below:
Bounce Bank Loans scheme
In order to help the small & medium sized businesses, the CEO also announced the
Bounce bank loans scheme on May 4, 2020. there are various scheme that involves the covid
corporate financing, covid-19 venture interruption loans & the covid large venture interruption
loans. It is the scheme for those sole trader and the small-medium business which were running
successfully before the launch of pandemic but with the huge loss faced in the revenue,
disruption to cash-flow which is as per the results of current situations. Banking and financing
industry is willing to contribute to support the business in the adverse situations. The given bank
also provide the loans approx. £2000 to £50,000 and this leads to increases up to 25% in annual
turnover to the citizen of UK. The government also cover the interest for the first 12 month and
the given interest rate which was set to 2.5% and also gives the 100% guarantee in order to
lender. In order to take this loan, various business firms must establish the tax resident in the UK.
There is time of this loan is for six years and there is no change for the early
repayments(BOUNCE BACK LOAN SCHEME, 2021).
Eat Out Help Out Scheme

AS the scheme was launch by the government bodies on 8 July 2020 which also help the
hotel industry which they started again the implications of Covid-19. With the help of
government scheme, they also offer funds up to 50% for the food & non-alcoholic drinks in all
the restaurants within the nation from Monday to Wednesday. The discount was £10 per head &
this is not applied or event catering and take away.(Ferreira, Fernandes and Ferreira, 2022).
Customers could get the offer as many time, they want to give as more times as they want due to
there was no s such limit applied on the certain numbers of return of people to the restaurants and
the recovery economy. In this scheme overall £849 million also get across 78,116 outlets. The
average claim on an people was £5.24 and they are having the claim of over 160 million per
peerson meals.
Job Retention Scheme
It is the scheme that was introduced by the government in UK on 20 March 2020 &
opened on April 20, 2020. In this respective scheme, all the employees whose venture get
influenced by covid-19 and also ensures the proper management to maintain the business instead
of its size or sector. This particular scheme applies on those employees that are many firms that
says that they were put on leave during the Covid-19 pandemic. This is the reimbursement on per
workers were not less than 80% of its usual salary and this can be rise up to £2,500 in a month.
This particular scheme was planed to run between the March 1, 2020 to May 31, 2020 but,
somehow, this is being extended until 30 September, 2021. employer of UK who are the account
holder in the respective bank of UK & also started PAYE payroll scheme till 30 October 2020
and they are eligible for such scheme. In this scheme, there is approximately £17.5 billion which
was claimed and around 8.7 million workers had been furlough.
Self-Employment Income Support Scheme
This respective scheme was introduced by the government bodies of UK ON 26 march
2020 for the individual who are self-employment or in the partnership & lost their business with
the huge impact of Covid-19. These are the individual who is looking for and contributing of less
than £50,000 and it basically collects half of the income with the help of self-employment and
the taxable grant which is worth 80% of their monthly trading profits in the given period of time.
All the payments of such grants is basically subjected to the national insurance contribution and
the income tax. This respective scheme is meeting from Her Majesty's Revenue & Customs
(HMRC). It is the another round of such scheme and also was introduced on 29 May for those

who are being impacted by pandemic on & after 14 July 2020. Moreover, the government also
launched the coming wave of Covid-19 that are thrist, fourth an fifth round of such scheme.
Illustrate main response of Bank of England and its implication of circular flow of money in UK.
Reduced Interest Rate
According to the Central Bank of England, they has reduced the interest rate to 0.1% that
leads to get the results into loans on less interest rates for such venture and the household in UK.
The Monetary policy established on March 19 for accessing the overall concern and the property
of the government bodies & corporates bonds by £200 billion and its reduce the overall rate of
bank to 0.1%. It also help the small business & the households the three policy committees of
Bank on 11 March which also announced a package. on other hand, the Chancellor of the
Exchequer launched different aspects with the similar aim(Iqbal, Tang and Rasool, 2022). This
also leads to merge package of analysis was merged by the HM Treasury's launch of Covid-19
Corporate Financing Ficility (CCFF) on March 17. In order to buying commercial paper, the
CCFF would access the easy funds to the non-financial ventures to offer them better support for
paying the salary, suppliers & rents. On March 19, The Monetary policy committee(MPC) held a
meeting in that it was unanimously voted to minimise the Bank rate by 15 basis points to 0.1%
to enhanced the overall holdings of Central bank of England of UK government bonds & the
sterling non-financial investment by £200 billion to £645 billion.
Sustenance of Government Bonds
The bank of England is conducting with the HM government which gives the support to
the large ventures by giving cash for their debt. It will access the company in providing the
salaries and the given payments to suppliers, even of they have the major issues of cash flow.
The COVID-19 businesses interruption loan scheme is for all small & medium size business &
also helps the company with the turnover of approx., £45 million in order to get the government
backed with the finances that is approximate up to £5 million. when the government can access
the 80% guarantee so that they can lenders by which they can support the small medium
companies. This new loan facility of Bank of England for big organisation that are facing
disruption of cash-flows, the Covid-19, Corporate Financing Facility also help in facilitating the
purchasing of the short term debt which is called as the commercial paper that also give them a
fast and cost effective way so that they can enhance the overall working capital. As the bank also

encourages the other bank which also support the SMEs with the helps of its term funding
scheme for the SMEs.
What are the factors likely impacts of Brexit on economy of UK.
When the British exit from the EU and the nickname is being given is known Brexit. The
UK voted to leave the EU in the year of 2016. following are the consequences which is being
faced with the huge impact of Brexit that are illustrate below:
Immediate impacts
There is the huge impact of Brexit which affects the economic growth of UK and there
are uncertainties around the final outcome which slow the overall growth from 2.4% in 2015 to
1.0% in the year of 2019. AS the government of UK also evaluated that there might be the lower
growth in the economy and the industries that cover the trade relation with EU organisations,
migrations and the foreign investment(Iqbal, Tang and Rasool, 2022). There are huge
uncertainties in the UK due to the impact of Brexit and tends to reduce the overall business
investment that is 6% and the overall employment tends to reduce by 1.5%. Gross Domestic
Product not soley depends upon the overall productivity of the nation and the this is high but
more on the actual data of the given production that have the direct implied on the export, import
and the trade that are low in current scenario.
Future impacts
It is being analysed from the survey in 2016, Brexit tends to reduce the per capita income
of the people who are living in UK. This basically depends upon the current year of 2018. The
overall economic growth of the nation can decline by -2.8% for least in 15 years. Furthermore, as
the overall transition period is not over yet ad they need to pay the EU budget that can make the
situation which is even more catastrophic. In this time, there is no deal scenario, it affects the
overall GDP of the country and shrank continuously enough to affect the overall remarkably.
With the foreign investment is related to have positive affect on the country which is hosting in
long run.
CONCLUSION
From the above report, It is concluded that COVID-19 has diversely influence the
economy of UK. There is huge impact of covid-19 which is loss in certain sector that includes

the hospitality, food industry, clothing industry, tourism industry. This has also impacted the
pandemic restrictions on the growth of the nation and reduction in the overall GDP of the
country impacts the economy. Moreover, this is being seen that the government of UK has taken
the certain various which support the business and household in the country so that they can
launch various schemes also the given facilities for them. This also measures the Bank of
England which helped the getting loan which also support the business and the household in the
country by giving various schemes. The measures taken by bank of England helped the small &
medium sized business with the schemes that are above discussed. Lastly, it cover the influence
of British exit from the EU that is also known as the economy in UK.
RECOMMENDATIONS
In order to tackle the increasing crises due to this pandemic, government require to take
actions rapidly & strongly with the prioritizing the individual who are vulnerable. There are
certain point on that the government bodies must emphasis on the left behind people & places &
also support the workers and the businesses so that they can coordinate with the responsive
government. Further they may launch the temporary help to the financially vulnerable groups,
unemployed people & individuals who are going through the anxiety also the risk of loneliness.
Focus must be paid with the help of health system so that they can reduce the spreading of this
coronavirus. They further implement the schemes so that they can support the business by which
the economy can meet the financial looses during the time of pandemic and extend sick leave for
the employees. They can encourage the people to take the necessary precautions and work safety
as well the local market so that they can buy them that access them for enhancing the economy.

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