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

Contemporary Business
Environment

TABLE OF CONTENTS
TASK 1......................................................................................................................................3
Explaining impact of Covid-19 on UK’s economy & economic policies undertaken by
Government............................................................................................................................3
REFERENCES...........................................................................................................................9

TASK 1
Explaining impact of Covid-19 on UK’s economy & economic policies undertaken by
Government
The purpose of this article is to provide complete insight about the major impacts that
Covid-19 has on UK’s economy and how business were shattered and disrupted due to
prolonged lockdowns. It also explains all the measures & policies undertaken by UK
government along with Central Bank to enhance GDP growth and boost the economy.
Covid-19 which is also known as Black Swan Event has detrimentally affected UK
economy in unprecedented ways from lockdown restrictions to shutting down of many small
businesses and companies to the limits on mobility. In 2020, the decline in UK’s GDP was by
9.7%, which was the deepest decline. As Covid cases were, further lockdown were imposed
leading to fall in economic activity (Long and et.al., 2022). However, decline in GDP was
much less during the second lockdown because people & businesses has adopted various
measures over the previous years.
Many sectors of economy were affected especially of social contact like hospitality &
entertainment. Due to disrupted global supply chains & an increase in fuel prices, inflation
has risen to high levels which has further affected household budgets. Moreover, economic
shocks were observed due to shortage of labor, increase in death rates & fear induced
behavior.
Another major negative implication of Covid-19 was on employment levels, near around
7.6 million jobs were at risk. There were permanent layoffs from company, reductions in
hours & pays, etc. Moreover, people having jobs were also at risk of working from offices
because only 20% of workers were having work from home (Sokol and Pataccini, 2022).
They were concerned about their health and safety and has negative impact on well-being.
On the other hand, people employed in educational sectors were mostly secured with
their jobs and salaries. However, workers in accommodation & construction industries lost
their jobs completely. The current labor market crises is also hitting hard because it is
primarily run people who are leaving their jobs rather than reduced salaries. This has resulted
in leaving families with more income reductions.
Due to unemployment, financial stability & well-being is also affected badly. Consumers
are having of prolonged lockdowns & have pessimistic view towards financial stability due to
which they are spending less and saving more. Such an activity by general public has resulted
in poor economic recovery.