Impact of Corona Virus on the UK Economy

This research discusses the impact of COVID-19 on the UK economy, including the private sector, labour market, and purchasing power of consumers. It highlights the negative and positive effects of the pandemic on businesses, people, and the economy. The report recommends necessary actions to improve the economy.

Impact of Corona Virus on
the UK Economy

ABSTRACT
This research highlights about the impact of COVID 19 on UK economy. In this project, the
influence of pandemic on labour market, private sector growth and purchasing power of
consumers are explained in detailed manner. This report has illustrated about the negative as well
as positive impact of pandemic on the livelihood of people, businesses and labour market. The
crisis has created a great impact on the profitability and performance of companies. It has also
changed the way of working and also influenced the purchasing power of customers. People are
shifting towards online platforms in order to meet their basic requirements and needs. Thus, this
report provides detailed information related to the impact of pandemic on UK economy. It is
being recommended to government to take necessary actions in order to improve the economy.
They should encourage people to purchase local products so that it helps in increasing GDP rate
of country.

Table of Contents
ABSTRACT.....................................................................................................................................2
INTRODUCTION...........................................................................................................................4
AIM, OBJECTIVES, RESEARCH QUESTIONS..........................................................................4
Research aim..........................................................................................................................4
Research objectives................................................................................................................5
Research questions.................................................................................................................5
Scope and Limitation of Research..........................................................................................5
METHODOLOGY..........................................................................................................................6
ETHICAL CONSIDERATION.......................................................................................................6
REVIEW OF THE LITERATURE.................................................................................................7
CONCLUSIONS AND RECOMMENDATIONS........................................................................10
Conclusion............................................................................................................................10
Recommendation..................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
The pandemic has created a great influence on whole world due to which the economy of
countries get affected. In order to reduce the spread of disease, Government of UK has imposed
complete lock-down and restrictions. They have put restrictions over continuing the business
operations and movement of people (Keogh-Brown and et. al., 2020). The outbreak of pandemic
has made organisations to lay off employees as they were not able to pay employees due to
severe loss. The report provides detailed information about the impact of COVID-19 over private
sector, labour market and the purchase power of buyers.
COVID 19 has badly influenced the way of working and livelihood of people. In order to
save the lives of people and reduce the spread of disease, UK government has taken dramatic
measures which affects the economic activity of country. They have declared complete
lockdown on March 23, 2020 for controlling the pandemic. In During their lockdown period, the
economic activity of country goes down around 30 percent. There were 23 percent of businesses
that were closed in the weeks of April 2020. The pandemic has also influenced the consumption
and investment opportunity which results in decrease in GDP rate of UK. Every sector in UK get
affected by the pandemic due to which they faced severe loss and few of the businesses also shut
their outlet permanently in order to cope up with heavy loss.
The purpose of doing this research is to avail in-depth information related to the impact of
COVID-19 (Hu, 2020). I have a great interest in this topic as it helps in covering information
related to the current problem which world is facing and also I can analyse how COVID 19 has
influenced the livelihood and operational activities of business.
The research gap which is identified in this current research is that the information is
collected on the basis of qualitative piece of information and also it doesn't include numerical
piece of data (Jeris and Nath, 2020). The research is quite important for the investigators and
students as they can collect information related to the impact of pandemic and its influence on
UK economy. Thus, it covers in-depth data related to the effects of COVID-19 over labour
market and private sector.
AIM, OBJECTIVES, RESEARCH QUESTIONS
Research aim
To critically analyse the impact of Corona Virus on the UK Economy

Research objectives
 To critically evaluate how COVID impacted the labour market.
 To critically evaluate how COVID impacted the private sector growth.
 To critically evaluate how COVID impacted the purchase power of buyers.
Research questions
 How COVID impacted the labour market?
 How COVID impacted the private sector growth and the purchase power of buyers?
Scope and Limitation of Research
The scope of this research is to determine the affect of COVID 19 on UK economy. There
is a negative impact of crisis on economy but government must focus on reducing the negative
impact of pandemic by thinking innovatively and creatively. They must encourage businesses to
attract foreign investors and also adopt digital technologies in order to reach potential customers.
The limitation of this research is that lot of skills and knowledge is required for
completing this project as it is not easy to do. There are few limitations that become a barrier
while conducting this project such as shortage of funds, lack of time management skill and
availability of expired data through secondary sources etc.

METHODOLOGY
Research Choice:
Research choice is mainly divided into two forms such as quantitative and qualitative
research choice (Ngozwana, 2018). Researcher will choose choose qualitative research choice as
it helps in collecting theoretical information rather than focusing on numerical data (Holmlund,
Witell and Gustafsson, 2020). The purpose behind choosing qualitative choice is that it helps
collecting theoretical information in effective and efficient manner. Through qualitative choice,
researcher can collect theoretical data by gaining the opinions and views of the authors.
Data Collection:
Data collection is another method of research which is categorized into two types such as
primary and secondary data collection. In this research, researcher will choose secondary data
collection method as it helps in gathering second-hand information from different sources. The
secondary sources which will be used by researcher are journals, articles, books, newspapers etc.
The reason behind choosing secondary sources is that it helps in reducing time for collecting data
as it is already available on different platforms (Patel, 2020).
Research Technique:
The research techniques which will be used by researcher are systematic literature review
and case studies (Basias and Pollalis, 2018). Through these techniques, researcher can collect
qualitative and second hand information in appropriate manner.
Data analysis Technique:
In data analysis technique, thematic analysis will be used by researcher as it helps in
evaluating the relevancy of collected information (Cypress, 2019).
ETHICAL CONSIDERATION
There are few ethical issues which are faced by investigator such as maintaining
confidentiality of the gathered data, identifying new and existing information so that research
objectives could be achieved, properly communicating outputs and results of the whole
investigation (Urcia, 2021).

REVIEW OF THE LITERATURE
How COVID impacted the labour market?
As per the view point of Alradhawi and et. al., (2020) this is analysed that near about 7.6
million, or 24% of the United Kingdom workforce are facing risks of their jobs due to pandemic
COVID-19 and different restrictions imposed by the government. The people those have lowest
incomes are facing higher vulnerabilities in which risks are faced by them within managing their
regular life. In order to save lives of people living in UK and to slow down the virus speed the
government has initiated different restriction and these restrictions were imposed by the
government. These restrictions have drastically impacted the economic activities as after the
declaration of lock-down on 23 March 2020 and due to which economic activities are also facing
negative time. This is the rapid fall for the employment in which people are loosing their
identity. Near about 7.6 million jobs were laid off and this way job risk is faced within
occupations.
As per the perspective of Saeed, Bader, Al-Naffouri & Alouini (2020), COVID-19 has
impacted the labour market of UK adversely as around 7.6 million jobs of employees are at risk
in the lockdown period. Places and people with the lowest income were affected mostly as they
were not able to fulfil their needs and wants due to low income. Covid-19 has great impact on
the economy of UK and labour market as there was decrease in the number of jobs in UK
market. In the peak of Covid-19 in April 2020, around 31% of the eligible and on market jobs
were furloughed from the business economy. By January 2021, the rate of unemployment has
raise to around 5%, which is considered as the highest since 2016 and however not that much
high as it might have been without the support of government. The corona-virus global has
presented a significant challenge to the UK economy as they face the problem of unemployment
and economic changes.
According to Pichler, Pangallo, del Rio-Chanona, Lafond & Farmer (2020), COVID-19
has overpowered and controlled the life of so many people as the ability to earn money is
reduced because of uncertain income in the time of pandemic. With the rapid increase in the
cases of Covid-19 in UK, the government has announced a complete lockdown with certain
restrictions of not going out of house and travelling from one place to another. The effect of
Covid-19 pandemic has been specifically more dramatic for self employed workers as with
complete lockdown in UK, businesses are shutting their outlets as they were not able to bear the

loss. More than 40% of the people who were self employed in the month of January and
February has experienced a 100% decline in the sales of their products and services in the first
month of the complete lockdown. Some of the small businesses in the UK results in termination
of their business operations as they were not able to pay rent and salary to their staff members.
As per the opinion of Ali (2020), there were around 32.90 million people who have their
jobs in hand since November 21 to January 2022 as compared to the previous data of around
33.01 million in January to March 2020. The rate of employment in these two quarters has
shown a downfall of around 1.6% which resulted in decrease in the employment opportunities
for young graduates in the UK business environment. The government of UK implements several
changes in order to protect and safeguard the life of people from the spread of the deadly virus.
The performance of national income of UK during the time of pandemic has result in a sense of
concern for people and hides the uneven changes. The effects of Covid-19 create a serious issue
in future for many companies and people’s life. There is a huge decline in the employment rate
of young people in the year of 2020 as compared to the previous year 2019 which has raised the
rate unemployment and economic inactivity.
(Figure 1: Labour market of UK, 2020)
From the above graph it is interpreted that the employment level for both young aged
between 16 to 24 and older people aged above 65plus has declined by 3% and 8%. The
employment level for people in the age group between 25 to 64 has also shown a decline but
only by 1%. A steady increase in the rates of employment opportunities for young people has

raised in the year 2022 as compared to previous year. More than 63000 young employees aged
between 16 to 24 were employed in the month of November 2021 to January 2022 as compared
with the previous quarter, an increase by 2%. Further it is also analysed that 33% old people of
age group 18 to 24 and 23% of age group people between 55 to 56 who were employed before
the COVID-19 pandemic situation experienced a phase of unemployment from last 3 months in
the year 2021.
How COVID impacted the private sector growth?
As per the opinion of Hu (2020), The pandemic has influenced the overall productivity and
profitability of UK business. Private company faces various problems in COVID 19 as they face
difficulty in arranging and acquiring capital in order to business in effective and smooth manner.
The outbreak of crisis becomes disaster for companies as they were not able to continue their
business operations. It has also created slowdown for taking loans from different lenders as
investors have set their mind that they will face loss in the period of pandemic. The pandemic
has bring uncertainty for private organisations due to which it becomes difficult to generate
revenue and improve the business performance. COVID 19 has increased the debt level of
private organisations due to which it becomes difficult to clear in future (Jallow, Renukappa and
Suresh, 2020). It has created debt raising environment as people are borrowing more capital.
According to Covid-19 pandemic has created a great impact over the private sector of the
United Kingdom. Arranging and collecting capital funds for the private companies is quite
difficult due to which they cannot carry out their business operations in smooth and effective
manner. The exceptional outbreak of the Covid-19 in UK economy has created a disaster for
many companies as they were unable to carry out their activities in UK market for attaining high
growth and productivity. The situation of pandemic has showed a decline in the employment
sector which results in losing jobs of many people and making it difficult for people to fulfil their
basic needs.
As per the perspective of Alves & Kvangraven (2020), the lenders were not ready to give
money for supporting the companies as the investors has a fear in their mind that they will face
losses because businesses are not in a condition to run business activities in effective and
efficient manner. The sudden outbreak of global pandemic has created a slowdown in the private
sector and resulted in losses which influence the growth and productivity of company in market.
The Covid-19 has impacted the growth of private sector negatively due to which businesses,

economies and individuals are in fragile situations. The pandemic has increased health care
emergency which results in global economic crisis and problem.
According to Bagchi, Chatterjee, Ghosh & Dandapat (2020), the pandemic situations has
affected many private sector companies and their operations and also it influenced the livelihood
of half of the population. As the travelling was restricted by government of UK, the private
travelling companies and airline industry has affected with a huge loss. The Covid-19 has created
an uncertainty for various private companies which influence their long term growth and success
in UK market. The companies who have designed contingency plans for leading and fighting
with crisis they can survive in the tough time of pandemic.
As per the opinion of Ozkan (2021), Covid-19 has created a situation of distress in the
economy as they are not able to fulfil the demands and needs of customers and employees.
Because of unemployment in the economy the employees are facing problems of salary and
earning livelihood which influences the life of so many people. With the sudden emergence of
Covid-19 private companies are providing work from home facility to their employees in order
to maintain safety and protecting people from the spread of virus. The pandemic has also put
many companies in the situation of losses which raises their debt level and this creates problem
for private organizations to repay the debts in the coming years. All types of credit relations
needs to be considered by the companies in order to lend money from banks and alternative
lenders to carry out the operations of the business in a reliable manner.
According to Chen, Cheng, Edwards & Xu, (2020), this outbreak has resulted in high
debt for many companies as there is no sale of products in the market and this has forced them to
close their business operations in the market of the UK. It is important for the private companies
to carry out their business operations through online platforms as it helps them in gaining more
market share and creating strong customer base so that there sales and growth can be increased in
UK market.
How COVID impacted the purchase power of buyers?
As per the opinion of Brewer and Gardiner (2020), the pandemic has changed the
intention, behavior and purchasing patterns of customer. COVID 19 has gained attention as it has
connected the countries and also companies are adopting digital technologies in order to reach
target customer. Despite of pandemic, consumers are continuing to purchase products and
services for fulfilling the basic needs and requirements. They are purchasing essential products

like groceries and household supplies (Chronopoulos, Lukas and Wilson, 2020). It is being also
analysed that consumers are spending their funds on home entertainment in order to reduce the
anxiety and stress while sitting at home.
As per the perspective of Gerwe (2021), COVID 19 has influenced the purchasing power
of consumers as they have shifted towards online shopping as compare to offline shopping. Due
to pandemic, people are more focused on purchasing goods via online platforms in order to
maintain social distancing and reducing interaction between the humans. UK government has
imposed the restriction and announces complete lock-down due to which consumers are
following stay at home orders and allowed to leave their home for purchasing essential items
only such as groceries and pharmacies. People are demanding hand sanitizer and toilet papers
due to lockdown restrictions. Customers are more concerned about the impact of COVID 19
from the perspective of economic and health. They are responding in different ways by having
different attitudes, purchasing habit and behaviors. The priorities of consumers are fulfilling
most basic needs, cleaning, demand for hygiene and staples products soaring. Consumers are
spending to fulfil their basic needs and requirements by using online channel. Spending on eating
out, cultural activities and leisure activities gets affected by the restrictions of pandemic.
As per the viewpoint of Polkowska (2021), the purchasing power of consumers get
increased in pandemic as they started to purchase more products in order to stock the necessary
items for the future. They are continuing to spend more as compared to pre pandemic levels in
order to meet their groceries and household supplies. It is being analysed that due to changes in
media consumption habits, there is an increase in the spending of consumers on at-home
entertainment. It becomes difficult for people to spend their time while sitting at home. In order
to reduce their stress and anxiety, people are taking subscriptions of entertainment channels like
Netflix and Amazon prime. These platforms provide different series and shows that help in
reducing the anxiety and stress of people while sitting at home. The purchasing power of
consumers gets decreased in travel and transport due to social isolation and tightening travel
restrictions. Demand of online purchasing is increased as people prefer online shopping more.
They purchase the products and services online as it is convenient and also reduces the time.
As per the opinion of Benito (2020), the purchasing power of consumers gets influenced
as they are less spending on restaurants and bars due to pandemic. Half of the consumers are
consuming food and drinks, baking and cooking at home in order to stay away from spread of

disease. Spending of consumers on restaurant and bars get reduced due to pandemic. Thus,
consumers generally purchase the food items via online by placing orders and taking home
delivery.

CONCLUSIONS AND RECOMMENDATIONS
Conclusion
It is being concluded form the above information that COVID 19 has influenced the
economy of country by causing direct impacts on income due to premature deaths, job loss,
workplace absenteeism, reduction in productivity, closure of factories, manufacturing productive
activity slowing down because of global supply chain disruptions and negative supply shocks.
The pandemic has badly affected all the industries in UK such as construction, education,
wholesale, production, transport and hospitality industry. These industries contribute in
improving the economy of the country. It also creates an impact on the labour market as
unemployment rate is increasing due to pandemic and people were also facing job crisis.
Recommendation
 From the above information it is being recommended that government must focus on
providing more job opportunities to people in order to reduce the impact of job crisis.
 Government must also encourage the industries to adopt digital technologies in order to
generate revenue. They must focus on attracting foreign investors so that they can
contribute in improving the economy of country.

REFERENCES
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