Impact of COVID-19 on UK Economy: Rise in Inflation and Cost of Living

The pandemic of COVID-19 has resulted in impacting upon all the economies in the world with adverse and negative effects. With the spread of virus in the society since the initial phase, it has been resulting in being a negative barrier to people in carrying out their personal as well as professional activities in an efficient manner. In addition to that, UK economy is among the major economies which has faced adverse effects through pandemic phase of COVID-19.

COVID affects to UK
economy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The pandemic of COVID-19 has resulted in impacting upon all the economies in the
world with adverse and negative effects. With the spread of virus in the society since the initial
phase, it has been resulting in being a negative barrier to people in carrying out their personal as
well as professional activities in an efficient manner. In addition to that, UK economy is among
the major economies which has faced adverse effects through pandemic phase of COVID-19.
Moreover, from people in society to representatives engaged in business organisations operating
in United Kingdom, each and every individual has faced issues due to spread of virus. Though,
many of the necessary businesses were going-on in that pandemic phase but they need to be
abided by rules and regulations implemented by government over that particular business. This
report essay will be comprised of insightful knowledge regarding the impact of COVID-19 over
world as well as UK economy in context of various significant factors (Bagchi,and et.al., 2020).
MAIN BODY
The rise of the pandemic COVID-19 was initially observed in the economic nation of
China which got further spread all around the world. For instance, with the travelling of infected
by the virus from one economic nation to another, it gave a rise to global crisis with patients in
almost each and every economic nation in the world. In addition to that, people were getting
infected from the spread of virus all around the globe with various symptoms of coronavirus.
With the spread of virus, people were feeling degradation of morale in meeting up with people in
a physical manner due to fear of getting infected from the virus. Furthermore, the primary
problem of this virus lied in visibility of symptoms which could be experienced by people but
after a big time-span of around 10-14 days. Furthermore, it resulted in development of negative
working environment due to lack of confidence among people in society to step out of there
shelter in order to carry out their personal as well as professional work.

In addition to this, all these adverse effects of pandemic COVID-19 affected business
organisation in some or the other manner. For instance, with the fear of getting infected, people
started avoiding unnecessary travels and visits in consumer market, which further resulted in
downfall of sales of products and services offered in the market. Moreover, each and every
business organisation in world economy has faced negative impact as well as losses due to
pandemic of COVID-19 (Barua, 2021). The huge losses incurred by businesses has resulted in
closure of several business entities due to inability of company to incur losses and afford fixed
expenses of business. In addition to that, Supply chains of businesses were majorly affected with
spread of virus as government has introduced restrictions upon almost various different activities
in order to tackle the situation of crisis or pandemic. Furthermore, almost every business and

individual with sufficient amount of capital were contributing values towards minimising the
impact of crisis by providing charity funds as well as welfare funding (Caswell, and et.al.,
2020).
Government of United Kingdom has played a crucial role in minimising the impact of
crisis over the economy of UK. For instance, government authorities of UK were contributing
consistent and maximum efforts towards managing the crisis in the most effective manner in
order to provide relief to people residing in UK as well as other economic nations. The primary
and major efforts initiated by government of respective nation were inclusive of reduction in tax
rates, introduction of additional subsidies, relief in paying dues and loans, regulating wages of
employees and labour, etc (Eikhof,2020). All these positive initiatives were aimed at effective
crisis management with consideration of all the factors as well as aspects associated with the
same. In addition to that, people in society as well as business organisation were provided with a
relief of reduction in tax rates in order to provide support to them in the phase of pandemic due
to COVID-19.

In order to control the adverse situation of pandemic, government of UK has introduced
and regulated various regulations in order to cope up with the situation. For instance, the primary
of these regulations were lock-down, necessity to wear masks in public places, self-isolation,
maintaining physical distance, etc. In addition to that, all these regulations were mandatory and
necessary to be followed by general public in society until and unless they want to get charged
for the same. Moreover, government authorities of every economic nation was aimed at
encouraging general people in society in order to contribute their efforts towards prevention of
crisis going on due to spread of virus (Gerwe, 2021). Residents of UK could contribute
additional values towards betterment of overall scenario of crisis going on in the government by
maintaining government regulations in their daily and regular routine. Therefore, it further

supported in the meaningful journey towards prevention of virus from the entire economic nation
as well as global economy.
Referring to Business organisations in United Kingdom, business sector of UK has
experienced various adverse effects due to spread of virus among people in society. For instance,
there were several regulations implemented by government over these businesses including
sufficient sanitisation, maintaining physical distancing at workplace, following the time limit
allotted to carry out business operations and activities, limited number of workforce at a
particular period of time (Jiang, 2020). In order to cope up with these crisis situations,
management representatives engaged in these organisations were aimed at development of
effective and efficient strategies in order to carry out business operations and activities.
Furthermore, these management representatives initiated maximum efforts and initiatives
towards consideration of most effective and efficient strategies in order to implement them into
workplace. Moreover, contributing various additional efforts towards effective communication
was major consideration of each and every business organisation in order to maintain effective
coordination and collaboration in workplace (Kohnert,2021).

National income of UK has been affected by pandemic phase of coronavirus spread in
economy. For instance, inability of businesses in paying salaries and wages to their employees
has resulted in loss of job or employment opportunities by individuals. Almost each and every
business organisation has taken this step of dismissal of employees due to huge losses incurred in
the phase of COVID-19. On the other hand, issues of getting lower salaries and wages has been
experienced by many individuals engaged in a business organisation. In addition to that, the
deduction in salaries was either promised to be paid with future salary or not to be paid
according to policies of that particular business organisation (Lim, and To, 2021). This issue
further resulted in increasing rate of unemployment in the economy of United Kingdom due to
loss as well as lack of job opportunities. In order to earn a living, local residents of UK were

ready to practice any sort of job opportunities which could provide them with sufficient amount
of living.
Referring to above mentioned information, loss of job opportunities, losses incurred by
business organisations, closure of businesses has been resulting in gradual degradation of
National income of that particular economic nation. Though, the medical industry has
experienced quite higher profits even in the pandemic phase of COVID-19 but on the same time
it has contribute maximum potential efforts and initiatives towards betterment of overall scenario
(Liu,. and Lin,, 2021). Even the medical industry has invested huge capital in development of
vaccine in order to minimise the spread of virus in the economy. For instance, with the inclusive
of government charities and investment of medical industry, billions have been invested in the
research & development of Vaccine of coronavirus. All these investment and expenses further
resulted in a positive manner with development of Vaccine that could prevent an individual from
getting infected from Virus. Furthermore, Vaccine strengthens an individual with development
of anti-bodies in their body that works as a shield against Virus (McCann,. and Vorley, 2021).

All these negative factors and aspects further contributed towards National income in a
negative manner by impacting the same with adverse effects. For instance, the economic nation
has faced a huge downfall in National income due to spread of virus and government restrictions
over unnecessary and casual movement of people. The primary aim and determination of
government lied in prevention of the crisis and health of people in society. In addition to that, a
healthy society could contribute efforts towards development of economic nation in an efficient
manner. On the other hand, if there will be a unhealthy society, individuals will not be able to
boost or maintain national income in UK. Furthermore, people in society with sufficient amount
of funds were contributing best of their efforts towards society by providing needy people with
charity food and other necessary requirements of people in society (Özbük, Coşkun, and

Filimonau, 2021). Therefore, National income of UK was facing a huge degradation as well as
downfall due to spread of virus in the economy.
The cost of living in United Kingdom has been rising since pandemic phase of COVID-
19. For instance, since the economy has been boosted up after the crisis, people have been facing
the issue of higher cost of living in UK due to rise in prices for almost everything. In addition to
that, primary and major of price hikes has been observed and experienced in various sectors
including transport, Food industry, Education, Health, etc. which are required in daily routine life
of people in society. Moreover, with the increase in prices for these commodities, it has directly
resulted in cost of living for an individual in UK. As compared to cost of living prior to the
pandemic phase of COVID-19, people residing in United Kingdom were required to pay
additional amount of expenses for their routine consumption of products and services. It includes
both fixed as well as miscellaneous expenses of people in every their routine life which further
resulted in increasing cost of living in United Kingdom.
As the government of UK has been contributing immense amount of efforts and
initiatives since the rise of spread of coronavirus in the global economy, government has
invested enormous amount of funds and charity in order to cope up with the crisis situation. For
instance, government is initiating immense efforts towards maintaining the cost of living in
United Kingdom but still there is a increase experienced by the people in United Kingdom. In
addition to that, people in society are facing issues of managing their daily expenses with their
salary or compensation due to increasing cost of living. Moreover, the maximum of rise or
increase in price of commodities has been experienced in the essential and necessary
requirements of people in society. Therefore, people do have relief after the prevention of spread

of virus in society and global economy as it has resulted in elimination of restrictions and
regulations of government (Panzone, Larcom, and She., 2021).
In the Covid-19 all the economies working were settled down due to inactivity in the economic
functions. According to the government statistical data the inflation is accelerated to 4.2 in the
last 12 month by the starting of the COVID-19. The increase is clearly bigger than excepted and
it is on the high since 2011. one of the main reasons of increasing the inflation rate in UK is due
to the increasing in the overall cost of everything. As due to pandemic all the political bound ires
were closed which directly impacted the import and export in the mentioned nation. In regard to
this, due to scarcity of the resources the prices are automatically increased in the mentioned
nation. Moreover, the national debt on the UK government were increased due to overcome the
situation of the COVID- 19. during the pandemic the mentioned government offers the financial

helps to various corporate business of UK as well as also decreased the interest rate that
adversely impacted the government practises (Polkowska, 2021).
Moreover, the mentioned government enforced the various guidelines for the businesses
which need to perform their business functions in the operational market. As in order to
safeguard the employee and customer companies deployed investment and also offers the high
wages to hit employee which offer their job role during the pandemic. All of these practises has
directly increased the prices of product and services that ultimately caused the high inflation in
the UK economy. In order to overcome the national debt the mentioned government increased
the prices of electricity 12 % . the prices of Household items are also on its peak. Hence the
increase in interest inflation is impacting all of the people in the economy. In addition to this the
shortage of raw material in the factories directly increasing the cost of the finished goods, due to
which fluctuation in the demand and supply is impacted. The shortage in jobs is clearly stated, as
the people are in the fear to offer their job roles due to COVID- 19. in regard to this, due to
shortage in the employees the operational cost for the companies are directly increasing, as they
paying the extra salaries and incentive to all their employees. All these practises in such scenario
directly increase the overhead cost. In addition to this, to overcome these costs, businesses are
increasing the cost of product in order to fulfil their operational cost (What is the UK's inflation
rate and why is the cost of living going up? 2022).
The national living wage rise by 6.6% to 9.5 an hour which is way much higher than the current
inflation rate of the UK. Prices of every commodities are at high in compare to t he past 30 year.
Moreover the bank of England has clearly warned to all the concern public that the inflation will
be rise even more by the end of this year. It assumed that it could be touched to double digit
number which is way much higher in the history (World Bank, 2020).
CONCLUSION
From the above report essay, it could be concluded that pandemic phase of COVID-19 has
resulted in adverse negative effects upon global economy including each and every economic
nation. For instance, United Kingdom has been resulted in being a major economic nation with
huge negative impact due to spread of COVID-19 in the economy. In addition to that,
Government of UK played a crucial role in minimising the impact as well as overcoming the
economic nation from being affected by pandemic of coronavirus. Furthermore, there has been a
downfall in National income of UK due to loss of job opportunities, government restrictions,

unemployment, etc. which all contributed towards downfall of National income. Therefore,
increasing cost of living and rising rate of inflation are another major impact of COVID-19 upon
respective economic nation.

REFERENCES
Books and Journals
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Caswell, and et.al., 2020. Cash in the Time of Covid. Bank of England Quarterly Bulletin, p.Q4.
Eikhof,2020. COVID-19, inclusion and workforce diversity in the cultural economy: what now,
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Panzone, Larcom, and She., 2021. Estimating the impact of the first COVID-19 lockdown on
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Polkowska, 2021. Platform work during the COVID-19 pandemic: a case study of Glovo
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