Impact of Covid-19 on UK's Economy and Government Policies

This essay discusses the impact of Covid-19 on the UK's economy and the policies undertaken by the government and central bank to respond to the threat of the pandemic. It covers the sectors affected, job losses, and schemes like Job Retention Scheme, Kickstart Scheme, and more.

Individual essay - impact
of Covid19

Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
Impact of covid-19 pandemic on the UK's economy..................................................................3
Economic policies undertaken by UK's government and central bank to respond the threat of
the pandemic on the UK's economy............................................................................................6
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Introduction
Covid pandemic is ongoing global pandemic which is caused by Corona disease. It is
spread from one person to another. Hence, to break the chain, government had used lock downs
and social distancing rules and regulations in their countries (Nicola and et. al., 2020). On the
other hand, same safety measures will also cause economic loss by reducing their overall income
and GDP. The development of nations slower down due to this pandemic, customers purchasing
power get reduced due to loss of jobs. Therefore, there are various negative impacts of covid
pandemic upon economy. In context of UK, their government and central bank made some
schemes and take some measures to develop the economy well and cover the losses which they
have faced during the pandemic. The following file covers impact of covid-19 pandemic on the
UK's economy and economic policies undertaken by UK's government and central bank to
respond the threat of the pandemic on the UK's economy.
Main Body
Impact of covid-19 pandemic on the UK's economy
Covid-19 pandemic impacted bad upon UK's economy by following ways-
 It was recorded that the UK had faced £700 billion lost output due to covid pandemic.
UK's economy fall by 9.9% in the year 2020 due to covid pandemic.
 It was also recorded that the UK's unemployment rate has increased and reached to 4.8%
which means that people are losing their jobs rapidly in this pandemic (The impact of
COVID-19 restrictions on UK growth and the benefits of full inoculation, 2022).
Companies are not able to earn well from their operations and due to which they
eliminate few non-essential workers from their offices which further increase
unemployment rate of UK. 4.8% of unemployment rate describe that one person out of 20
will remain unemployed in UK. It was estimated that 7.6 million jobs or 24% of UK's
workforce is having risk to loose their job in upcoming covid situation. The main cause is
upon those employees which are having lower income jobs.
 It was also recorded that due to job loss or cut of payment, it cause to decline of
purchasing power of customers (Alradhawi and et. al., 2020). Most of the customers only
purchase essential commodities and save their income for future use. When the
purchasing power of customers get decline than companies stop producing quality
products and their raw material get wasted without proper utilization.

The various kinds of sectors impacted negative and positive due to the pandemic are mentioned
below-
 Retailing sector- Most of the retailing business of UK like Tesco, Morrison and many
others which are having supermarkets and hypermarkets to sell groceries have to face
losses (Keogh-Brown and et. al., 2020). Due to lock down and social distancing their
customers are not able to reach at their stores but it is found that online retailing business
has developed well and full fill the needs and wants of customers by delivering their
groceries at their door steps. Hence, the customers of retailing customers switch to online
shopping rather than traditional shopping.
 Hospitality sector- This sector faces huge loss from covid pandemic in UK. Here, hotels
and restaurants target to gain international customers who arrive at their hotels for
various purposes like meetings, events and many others. Due to lock down, UK restricted
to enter any international person to arrive at their destinations for travelling purpose to
break the chain of corona disease.
 Healthcare sector- This sector get development in the situation of covid pandemic. Most
of the people invest high to purchase good quality of mask and sanitizers so that they will
protect them self from covid disease (Maria and et. al., 2020). They are also investing
high upon maintaining their health well by nit ignoring their ill health and get a medical
treatment in case of illness. Hence, the only sector which grow well during covid
pandemic in UK and other countries is medical and pharmacy sector.
 Education sector- This sector of UK also face issue due to covid pandemic. Most of the
students get dropped out from the schools and university and plan to continue their study
after pandemic get over. Secondly, the online classes which is opted by universities and
schools have impacted bad upon personalized learnings of student. In online classes
teachers are unable to pay proper attention toward the performance of individual students.
This will further impact bad upon practical learnings of students and secondly, in online
classes most of the students try to perform academic misconduct more.

Graphical representation of impact of covid pandemic on UK's economy-
From the above diagram it is represented that almost every sector of UK are having risk
of loss of job. It is predicted from the above image that black area is concerned with overall job
in the industry and blue coloured area represent the job at risk due to covid pandemic in that
industry (Rakha and et. al., 2021). It is interpreted that accommodation and food services sector
in UK are having highest percentage of job loss. Information and communication sector is
having least job risk and water supply, sewage and wastage sector is having no loss of jobs as
these are basic necessity of human life. They have to work whether there is any condition within
an economy.

From the above diagram it is evaluated that the UK's economy grow by similar rate. Few
differences of up and down in economy is seen before 2020 but they continuously grow before
2020. Suddenly, the economy of UK falls in the year due to covid pandemic and now it starts
raising up rapidly because it want to cover all those losses as soon as possible which they have
faced during covid pandemic so that their economy will not get impacted by the pandemic for
longer period of time which is more harmful for the economy.
Economic policies undertaken by UK's government and central bank to respond the threat of the
pandemic on the UK's economy
While measuring the harmful impact of covid pandemic upon economy, the UK
government and central bank has made some policies and schemes to cover up the loses and help
the economy to grow well for future benefits and these schemes are mentioned below-
Job retention scheme- It is applied in Scotland, Wales, England and Northern Ireland.
This scheme basically aims to help those employers who are unable to maintain their employees
within their organisation due to covid pandemic (Etheridge and Spantig, 2020). According to this
scheme 80% of furlough employees wages will be paid by government so that employer will not
face financial issue and the employment rate will be maintained for the economy.
Kicktart Scheme- This is the scheme which is applied in England, Wales and Scotland
only. This scheme is basically made for those entrepreneurs who recently started their jobs and

due to lock down their bank loan interest get increased for them. This scheme is for 16-24 year
of age group people who have been claimed for universal credit and who have the biggest risk of
facing long- term unemployment. According to this scheme, the government will cover the cost
of employees wages for the first sixth month of new start ups for 25 hour per week. Here,
government also claim to cover the cost of national insurance contribution and minimum
automatic enrolment pension contribution. This scheme get used first in November 2021 and
around 20,000 people have been employed. It is essential for the companies to at least apply for
30 employees to take the advantage of this scheme but in case the company is not having that
much of employees then they can use partnership form with other company to fulfil minimum
number of applications for this scheme.
Apprentice scheme- This scheme has started from August 2020 and get ended in
January 2021 and it is applied only in England (Burchell and et. al., 2020). According this
scheme when a organisation hire new apprentice of age group between 16- 24 than the firm will
receive £2,000 and in case any firm will hire employee of 25 age or over than they will receive
£1,500. This scheme will plays a important role in motivating employees to hire more young
generation employees for gaining more profit. This will maintain the employment rate of UK and
keep developing their economy.
Statutory Sick Pay (SSP) refunds for smaller businesses- According to this scheme,
the companies who are having less than 250 employees can ask a claim for their employees paid
leaves due to their absence because of covid pandemic (Government and Institution measures in
response to covid- 19, 2022). They can ask for up to 2 week paid leaves for their employees.
This scheme will also cover those expenses which a company have to face due to employees
isolation and sick health due to covid pandemic. For the companies who ask the benefit from this
scheme must have connected with another scheme which is PAYE payroll scheme.
Coronavirus Business Interruption Loan Scheme for smaller businesses- Under this
Scheme, those business get benefit whose annual turnover is not more than £45 million. These
businesses can borrow up to £5 million interest free loans for initial 12 months. This will
promote their banking activities and influence small businesses to take loans for their business
activities and invest them for right purpose for their growth without having any fear of interest
rates for one year (Arthur-Holmes and Agyemang-Duah, 2020). It is essential in this scheme that

the £45 million turnover will be related to whole group of business and not be related to
individual company turnover level.
£750m coronavirus fund for front line charities- According to this policy, the UK
government have announced funding of £750 million for UK's front line charity. From this
scheme, £60 million will be provided to Wales, Scotland and Northern Ireland. Here,
government will focus to provide funding to those charitable trust which are helping people for
the treatment of covid pandemic and especially for vulnerable people (Wielgoszewska and et. al.,
2021). This scheme will help to develop the life standards of those people who are in
requirement for government help.
Support to cultural and art industry- Government of UK also focuses to develop
cultural and art industry by investing £1.57 billion. This packages is compromising of following
points-
 £880 million will be provided to English culture organisation.
 £270 million loans to English culture organisations.
 £120 million to those companies which will invest in restarting construction of cultural
infrastructure in England only (Bu, Steptoe and Fancourt, 2020).
 £100 million for those institutes which will help to maintain the UK's heritage well for
representation and this will be provided to England's National Cultural Institution.

Conclusion
From the above information it is concluded that there is bad impact of covid pandemic
upon each and every sector of UK's economy. The GDP rate of UK get declines and most of the
job holders had lost their jobs during covid pandemic. It is also concluded that accommodation
and food services department is having higher risk of job loss where as least risk of job loss is in
water supply and sewage industry. UK's economy continuously gain growth before the year 2020
but they rapidly fall at the starting of the year 2020 and they made various schemes and policies
to develop their economy and cover all the losses. It is seen that the UK economy is now
growing well and focusing on their infrastructure because their government and central bank had
made those policies and schemes which will help them to develop well by covering all extra
expenditure due to covid pandemic. Few of the schemes such as Job Retention Scheme,
Statutory Sick Pay (SSP) refunds for smaller businesses and many others were made for
providing benefit to those people who get unemployed during the pandemic and motivate SME
to grow well by using appropriate banking facilities.

References
Books and journals
Alradhawi, M. and et. al., 2020. Effects of the COVID-19 pandemic on mental well-being
amongst individuals in society-A letter to the editor on “The socio-economic
implications of the coronavirus and COVID-19 pandemic: A review”. International
journal of surgery (London, England), 78, p.147.
Arthur-Holmes, F. and Agyemang-Duah, W., 2020. Reaching older adults during the COVID-19
pandemic through social networks and Social Security Schemes in Ghana: Lessons for
considerations. Journal of gerontological social work, 63(6-7), pp.699-701.
Bu, F., Steptoe, A. and Fancourt, D., 2020. Loneliness during a strict lockdown: Trajectories and
predictors during the COVID-19 pandemic in 38,217 United Kingdom adults. Social
Science & Medicine, 265, p.113521.
Burchell, B. and et. al., 2020. Cut hours, not people: no work, furlough, short hours and mental
health during COVID-19 pandemic in the UK.
Etheridge, B. and Spantig, L., 2020. The gender gap in mental well-being during the Covid-19
outbreak: evidence from the UK (No. 2020-08). ISER Working paper series.
Keogh-Brown, M.R. and et. al., 2020. The impact of Covid-19, associated behaviours and
policies on the UK economy: A computable general equilibrium model. SSM-
population health, 12, p.100651.
Maria, N. and et. al., 2020. The socio-economic implications of the coronavirus pandemic
(COVID-19): A review. International Journal of Surgery, 78, pp.185-193.
Nicola, M. and et. al., 2020. The socio-economic implications of the coronavirus pandemic
(COVID-19): A review. International journal of surgery, 78, pp.185-193.
Rakha, A. and et. al., 2021. Predicting the economic impact of the COVID-19 pandemic in the
United Kingdom using time-series mining. Economies, 9(4), p.137.
Wielgoszewska, B. and et. al., 2021. The UK Coronavirus Job Retention Scheme and changes in
diet, physical activity and sleep during the COVID-19 pandemic: Evidence from eight
longitudinal studies. MedRxiv.

Online-
Government and Institution measures in response to covid- 19, 2022 [online]. available through
< https://home.kpmg/xx/en/home/insights/2020/04/united-kingdom-government-and-institution-
measures-in-response-to-covid.html>
The impact of COVID-19 restrictions on UK growth and the benefits of full inoculation, 2022
[online]. available through
< https://blogs.lse.ac.uk/businessreview/2021/07/05/the-impact-of-covid-19-restrictions-on-uk-
growth-and-the-benefits-of-full-inoculation/>