Economics for Business

Economics for business
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Executive Summary
UK is a free market economy but with government intervention at the point whenever it
is needed in order to maintain public welfare. UK was facing economic uncertainty from a quite
while due to many happenings like Brexit but coronavirus pandemic scare provided a thrust to
that economic uncertainty. Many restriction were put on people during lock-down which resulted
in changes in many trends and habits. This report contains two objectives – to ascertain factors
that have an effect over consumer spending and analyse their impact and other, to list down
various economic policies applied by UK government to restore economy and help consumer
spending return to normal.
In first section, market forces of demand and supply have been discussed with focus on
the determinants of demands that have an effect over consumer spending. Factors like
government intervention, elasticity, income effect, etc. have been considered. In second section,
various policies and steps taken by government to deal with economic uncertainty and easing
pressure off people have been discussed. Various schemes like poverty programmes, furlough
schemes have been discussed.
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Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
Task 1...............................................................................................................................................4
Factors determining shifts in consumer retail spending in UK due to Covid-19...................4
TASK 2............................................................................................................................................9
Main UK government and economic policies to influence consumer spending....................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Consumer spending refers to the concept of to total monetary power spend by individuals
and households on ultimate goods and services in an economy while, on the other hand, retail
sales refers to a process of tracking the demand from consumer's end for finished products and it
is recorded over a period of time. This concept of consumer goods and its spending forms the
standing pillar for an economy. Any intense fluctuation in pattern of consumer spending can
have a significant impact on whole economic situation of hosting country. This report
concentrates on discussion of impact that COVID 19 has on economic condition of all businesses
all over the world. This pandemic has caused a serious decline in levels of consumer spending in
United Kingdoms and this also forms the base for all the discussion held in this report. Impacts
on both side, positive and negative impacts on consumer demand pattern are discussed with the
help of demand and supply analysis. Furthermore, there is discussion in context of various steps
that are taken by governmental authorities of UK to persuade and influence consumers to make
more spending. This induction in consumer behaviour is made, so that economic conditions can
be made stabilised.
Task 1
Factors determining shifts in consumer retail spending in UK due to Covid-19
UK has maintained a open market economy with a socialistic orientation i.e. the
government allows free interaction of market forces in production and demand in the normal
condition but intervenes whenever it is needed to, for stabilising the economy or promoting
public welfare.
Demand and supply function
Economics is based on utilising scarce resources available and aims to develop optimum
sources of utilisation of those resources. In near perfect competition market economy like UK,
there are multiple buyers and sellers. Producers try to develop and supply products with the
limited resources, with an edge over their competitors. On the other hand, consumers have
variety of options to choose from. While choosing one product, they foregone the benefit, its
alternatives could have provided them, this is known as concept of opportunity cost in economics
(ARUL BEC lectures, PowerPoint slides, & videos: ARUL & Young, 2020) .
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