Effects of COVID-19 on Consumer Retail Spending in the UK

This study explores the impact of COVID-19 on consumer retail spending in the UK, including factors influencing consumer confidence and the fiscal policies implemented by the government to revive the economy.

Economics for business

Executive Summary
The United Kingdom is a free market system, but with state intervention at the stage that it is
required to sustain public health. The United Kingdom has been facing economic instability for
quite some time as a result of a variety of incidents, such as Brexit, but Corona virus epidemic
scare has given rise to economic instability. During the lock-down, numerous constraints were
imposed on individuals, due to alterations in many methods and developments. This study has
two strategic goals: to recognise factors that have an influence on consumer confidence and to
examine their influence and others to list the numerous fiscal plans implemented by the UK
Government to revive the economy and allow economic growth to change dramatically.
In the first segment, the market conditions of demand and supply were addressed with an
emphasis on the price of the commodity that has an impact on consumer buying. Variables such
as state involvement, elasticity, income impact, etc have been addressed. In the second part,
different policies and measures adopted by the authorities to resolve economic instability and
alleviate the burden on people have been addressed. Different methodologies, such as poverty
services and layoff strategies, have been debated.

Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
Task 1...............................................................................................................................................4
TASK 2............................................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Capital spending comes from the idea of overall monetary force expended by families and
individuals on final products and services in the market, whereas online sales, but at the other
side, relate to the method of measuring consumer demand for manufactured goods over an
amount of time (Aydin, 2020). This idea of consumer goods and its expenditure is a constant
cornerstone of the system. Any intense variations in the trend of consumer demand may have a
major effect on the overall economic condition of the host nation. This article focuses on the
topic of the effect of COVID 19 on the financial environment of all companies around the world.
This epidemic has triggered a serious decline in consumer expenditure in the United Kingdom,
but this is also the reason for all the discussions in this paper. Effects from both sides, positively
and negatively on the trend of market production are addressed with the aid of demand and
supply research. In addition, debates take place in the sense of the different measures taken by
the UK government officials to convince and influence customers to pay more. This induction of
customer behaviour is rendered in such a manner that economic environments can be balanced.
MAIN BODY
Task 1
Factors determining shifts in consumer retail spending in UK due to Covid-19
The United Kingdom has preserved an open market system with a democratic focus, i.e. the
government permits free competition of market forces in supply and demand under usual
circumstances, but gets involved if necessary to stabilise the economy or encourage public
welfare.
Demand and supply function
Economics is focused on the utilisation of finite funds allocated and seeks to establish optimal
sources of use of these resources (Mulhearn and Vane, 2020). There are numerous buyers and
sellers in the close proximity market consumer economy like the United Kingdom. Producers are
seeking to grow and supply goods with scarce money, with an advantage on their rivals. In the
other side, buyers have a wide range of choices to select from. When choosing a commodity,
they forego the value; their substitutes may have given them, which is recognized as the principle
of investment return in economies.

Law of demand
It is dependent on two variables, quantity and expense. The quantity requested is the quantity of
products and services that the buyer is able to buy, supported by buying power, at a given
amount. The law expresses that under ceteris paribus situations i.e. all other variables stay
unchanged), the amount demanded and the price shown a negative correlation. This implies that
as the price of goods increase, the amount demanded falls down and conversely. As a
consequence, the quantity supplied describes a steady decline (law of demand).
Law of supply
It is dependent on quantity and costs. The supply curve is the quantity of products and services
that the retailer is able to sell at a given number. The law of demand states that, as other factors
are stable, price and quantity delivered have a positive connection, i.e. at increased costs
available, manufacturers are eager to sell even more products and services. The demand curves
thus have an upward trend (Law of Supply).
Under free economic conditions, price and economic forces combine and establish a potential
market balance which is a situation where it is presumed that at a given price, the aggregate
demand is equal to the quantity. This price is known as the price of balance and volume is named
the volume of balance. When there is a transition in the amount or price of balance, demand and
the quantity supplied are seeing a change. For instance, a change in the demand curve due to
increases in production will result in increased in both the equilibrated price and the quantity,
and a change in the quantity supplied due to the increase in demand will lead to a decrease in the
equilibrated price and quantity. Typically on the free market, all formulas display a parallel
change. When they display a move in the same path, it is generally possible to forecast the

resulting relationship between price and quantity, but explained by changes cannot be
anticipated. In the other hand, if they display a move in different ways, a change in price can be
expected, but there can be no movement along the demand curve. The direction the transition is
going depending on the curve that indicates a larger turn.
Below are numerous demand-driven reasons that have indicated a change in customer retail
spending in the United Kingdom due to uncertain business dynamics and market circumstances
due to Corona virus spread-induced lock-down:
The United Kingdom is a competitive economy with equal operations with market powers under
general circumstances. There seems to be a maximum bound on any item that customers are not
willing to pay on the goods or services. Due to corona virus concern, this cap has seen a
diminishing trend along with decreased demand, as people are trapped within their housing and
families are unequal. The demand side also saw a steady decline because the company divisions
were unable to operate at their full capacity and the operations were interrupted. This led to a
moderately smooth quantity supplied. But one segment of the industry saw an increase in
demand on the online market. Internet shopping and sales have seen a massive spike since the
lock-down (U.K. Grocers Limit Items to Avert a New Wave of Stockpiling, 2020). Citizens
became too distressed and ordered items like face masks, hand sanitizers, toilet tissues,
convenience shops, etc. in such a large amount that they were equal to hoarding. Many retailers
had to add capping to the highest purchase cap.

Complementary or substitute goods
Complementary goods are all those products whose production always exceeds UK market
purchasing levels last already seen corona virus, 2020n supplement one another like ballpoint
pen, while replacement goods are all those commodities whose request is often equally
incompatible, i.e. they are substitutes to each other. For instance, Apple and Samsung smart
phones (substitutes and enhances). Over the pandemic era, consumer purchasing graphs in the
United Kingdom have seen major changes. Many patterns varied from standard ones, such as the
digital economy, with demand for alternative products being so strong in total terms that it seems
like competitive demand rather than competing production. Complementary appetite for
important goods has also been seen (UK consumer spending approaches levels last seen before
coronavirus, 2020). Grocery retailers have seen trends in the stockpiling of staples, while
comparable items in non-essential items have not seen much improvement from normal demand.
Elasticity
Price elasticity of demand refers to the relation between the change in the quantity requested by
the consumer and the increase in demand. It is a statistical term, represented in absolute numbers.
The elasticity slope is distinct from the equilibrium price. Apart from the price elasticity, there is
a sales relatively elastic and a cross quantity demanded. Price elasticity governs the relationship
between demand and the consumer's profits, whereas cross-elasticity regulates the demand for
alternative and replacement products. Substitute goods display a favourable bridge while product
attributes exhibit a strong border compared to price transition (Video games top list of pocket
money spending in lockdown, 2020).

Essentials are typically inelastic by default. During the time of the pandemic, shopping for
essentials saw a massive surge. Citizens were in a number of panic purchasing products that
made too many new goods excess supply. The stocking up of non-essentials such as arts and
crafts, self-care products, home decor, students' development events, video games, etc. have also
seen a spike in figures that were previously considered luxurious and elastoplastic market. Yet
recent developments have also demonstrated elastic properties in their requests.
Government intervention
The UK Government does not engage in business activities, but applies price caps whenever and
however possible. It imposes price regulation in the context of the price limit and the value of the
board. Ceiling prices contribute to shortfalls such as wasted money, ineffectively bad condition,
etc. Floor prices lead to inefficiencies such as ineffectively excellent quality, wasteful
distribution of revenue among vendors, etc. yet also required to preserve public health. During
the pandemic era, the government has repeatedly had to place controls on people to protect their
health, but then freed up the economy with a campaign to save jobs. It imposed certain
constraints and then enabled people to operate so that the business consumers and producers
could begin to recover.
Income effect and shift in employment
During the pandemic era, people were asked about their work status and many quit their lives as
well. Many have been forced into poverty. All of this forced people to raise their resources and

minimize their retail spending, particularly on luxurious and semi goods. Saving customs have
seen an all-time record, according to figures from the National Statistics Agency (Coronavirus:
People saving more but get little in return, 2020).
TASK 2
Main UK government and economic policies to influence consumer spending
As mentioned in the above section of the article, the United Kingdom is an economy marked by
social attitudes and thus in circumstances of inflation and contraction, the key role to be played
by the government officials in the improvement of situations. Measures and fully realize by
public officials have a direct impact on the economy as a whole and on its consumption habits.
Various impacts apply to segments such as the arrangement of taxes, industry activities, bank
rates, etc. Thanks to the corona virus pandemic moment, government officials have introduced
alternatives such as direct money transfers, which could have an impact on the economic needs
of restoring consumer buying habits back to usual. There are alternative treatment options
formulated by the UK Supervisory Authority aimed at normalising business and consumer
spending:
Poverty programs
These initiatives and strategies are geared towards the key aim of reducing poverty in the United
Kingdom. The key problems facing the world are the effect of corona virus on the economic
condition of the country (Coronavirus will cause child poverty to soar. So what can we do about
it?, 2020). These consequences are linked to bringing more money under poor burden. The
biggest explanation for more people coming into poverty is the loss of their jobs and the loss of
economic opportunities. Corona virus has just about put an end to all business conditions and for
this purpose; there is a very sluggish influx of money in the form. The Office for Budgetary
Accountability (OBR) predicts that poverty will increase to 9.1% in 2020. In order to keep the
situation from worsening further in the potential, the government says on establishing a universal
credit system. Various other initiatives are linked to increasing job tax incentives and even
growing the services that are intended for youth, all of which are planned to reduce child
poverty. The budget has set aside hundreds of dollars for this scheme. This fund is tied to saving
the number of workers and saving these workers from the deprivation charts. Moreover, through
the implementation of a variety of social policies, the government is attempting to pull people

out of the poverty graph (Stimulus package for UK's poorest families vital, report says, 2020).
They are equipped with suitable treatment services to ensure the safety of someone under the
poverty threshold. While the state continues to do its best, there are rising demands from A
Family Initiative that are projected to lift 500 000 kids and 200 000 adults out of deprivation and
raise GDP by £19 billion or 0.6 per cent of GDP in 2021-22.
Government transfers and subsidies
The allocation of a total of £16 billion to the government of countries such as Scotland, Wales
and Northern Ireland is targeted towards the stabilisation of the host nation's populations. Thanks
to corona virus, the biggest burden on the segment of the market of the world has arisen and in
order to make business rebound from the stress of financial forces during this pandemic period, a
further €1.1 billion fund has been declared and distributed to company councils (National
restrictions: financial support for jobs and businesses, 2020). This allocation is targeted at
providing assistance to companies and helping them rebound from the burden of slowing down
the economy. An external fund of GBP 3000 is agreed to be made open to all small business
institutions that have been forced to shut down due to locally and nationally constraints to deter
the dissemination of corona virus in commodities. Additional announcements are made
concerning tax relief on VAT, market rate relief, grants, tax deferred payments and funding from
persons
Stimulus packages
These bundles contain all the measures and strategies formulated by the European Commission
which will help to drive production to new heights in the economy. To demonstrate this
government has declared a State loan worth 330 billion livers (Rishi Sunak promises £350bn
emergency rescue package for business, 2020). This fund is designed to offer assistance to firms
unable to cope with the challenges encountered by the corporate community as a result of the
global recession triggered by the time of the pandemic. An extra £20 billion fund has been
revealed in the name of the monetary handouts along with this program. The Government
recently declared that there will be a break in business rates for a term of 1 year. It has also
promised to include a donation of £25,000, which is meant to support stores and breweries that
have been unable to deal with this crisis.
Industry specific measures

This service is structured to announce a few specified bundles in order to offer a kind of
assistance to businesses and workers operating in these areas. To demonstrate this UK
Government has introduced a furlough programme aimed at avoiding mass layoffs. This
programme allows for pay subsidies for all workers who have been made to evacuate their jobs,
which was due to either the closing of their workplace or the extremely low level of job
prospects. In this arrangement, a certain part or proportion of the specified wage or compensation
is charged by the government officials and the company itself has had to pay the remainder. The
aim of this document is to find a middle way, so that workers do not lose their employment and
the employer is therefore willing to make it through a challenging period (Covid: How does the
extended furlough scheme work?, 2020).
CONCLUSION
In conjunction with the above-mentioned article, it can be explained that consumer spending is
fundamentally a result of the purchasing activity of customers in the market. There are numerous
factors in the economic system that decide the pattern of consumer purchasing and that
contribute to the pattern of demand, supply capacity, business research proposals, the amount of
income of the end consumers, etc. Moreover these aspects are decided by the relationship with
the business powers and the government only intervenes in situations when it assumes that the
economy is in a state of uncertainty. The key factor for all these problems and concerns is the
lack of capital and the obligation to fulfil the demands and desires of all customers, suppliers and
government officials to make effective use of this capital.

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