Economics for Business

This document discusses the impact of the global economic crisis on the UK market and the changes in consumer spending. It explores the laws of demand and supply and the factors influencing retail industry shifts. It also highlights the main UK governmental and economic policies to aid economic recovery from the loss of consumer retail spending.

Economics for Business

Executive Summary
The United Kingdom is a hybrid capitalist economy that exists on a market that is partly
dominated and run by the government of a nation. It works on the marketplace with both the
demand and supply powers for goods and services. Government action is successful where there
is an unusual occurrence and where people's health is at a decreasing risk. It is a globalised world
environment with a robust capitalist infrastructure and a financial framework and a highly
integrated social environment. Thanks to the global corona virus epidemic, the global economic
crisis has had a dramatic impact. The UK market is showing major economic damage as a result
of the shutdown and numerous business controls imposed by the state. The economy has seen
significant changes in demand and the production of consumer products. This is expressed in the
varying variations in consumer spending on retail products. It has produced both positively and
negatively shifts in the economy of a nation. Some forms of consumer purchases have been
boosted, whilst others have been decreased. Thanks to this unusual situation, the nation has been
plagued by distressing circumstances affecting the lives of its people.

Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Task 1...........................................................................................................................................4
Task 2...........................................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Consumption of goods and services in the industry is important to the growth and growth of
economies. The economic situation of a nation is influenced by the degree of demand and
consumer spending. Volatility in the economic growth for goods and services is contributing to
a transition in the overall economy of a region (Macroeconomics, 2017). The market powers of
demand and supply are two determining factors for global development and prosperity. Thus any
fluctuations or differences in consumer spending on retail products have an influence on the
business of the world as a whole. It can be encountered during a corona virus epidemic
contributing to a global economic downturn. As a result, the United Kingdom has different
ethnicities shifts in customer retail demand leading to an economic recession. The positively and
negatively change in increased competition for retail products and services is addressed with the
aid of production and consumption research. Various policy decisions and efforts to improve the
market are also listed below.
MAIN BODY
Task 1
Unique changes occurred in UK's consumer retail expenditure during pandemic-
The UK has experienced huge swings in market retail demand in different sectors as a result of
the corona virus epidemic. Strong and detrimental shifts have emerged in the retail market. The
economy is run by a hybrid capitalist and market economy, wherein the public owns and
manages some firms and the free movement of production and consumption powers on the
market.
Demand and Supply function
Economics is referred to as the field of social science with core elements such as scarcity and
preference. It is focused on the fact that assets in a nation are limited and small. These services
include property, labour, capital and an investor regarded as a factor of development (ARUL BEC
lectures, 2020). Consequently, due to lack of money, consumers must make decisions that
include the cost of opportunity, which is the next best option. Consumer appetite is thus
influenced by different variables, depending on finite capital, contributing to the option of
substitutes. They select alternatives that have optimum marginal benefit and fulfilment. In the

other hand, the supply of products and services meets market demand. Producers provide
customers with the value of capital to achieve market harmony. At the point of equilibrium,
demand for the product is constructed, with its availability contributing to the optimal use of
resources. There are various markets, such as perfectly competitive, monopoly, oligarchy, which
influence the functioning of the economy. It requires a range of customers and vendors that
contribute to extreme competition. Although, it has perfect competition in the industry where it
has a huge number of suppliers of related goods. Consumers have a range of options that allow
them to find the right solution. There are separate rules regulating the economy on which it runs.
They are-
Law of Demand
In that law, it notes that other considerations, such as the constant price and quantity required of
products and services, are negatively proportional over an amount of time. It is one of the
underlying concepts under which price rise leads to a decrease in the incidence of products
required and conversely (Corona virus will cause child poverty to soar. So what can we do about
it?, 2020). It is based on microeconomic conditions where the specific operations is determined
on the basis of the price change is separated by the increase in demand requested. It indicates a
negative association between price and quantity needed due to lack of capital, such as money or
discretionary income of a person. This is seen in the downward curve graph.
Law of Supply
In that law, it says that, because all other variables are constant, they have a clear relationship
with the demand and supply provided at a time. The quantity supplied is the amount of products
and services sold on the marketplace or made available to customers. This indicates that there is
a constructive difference between the quantity and the availability of commodities. This adds to
an upward trend in the provider's quantity supplied. It is focused on micro level economies
where the individual production of products is measured on the market.
Price Equilibrium
In this demand curve, the supply curve is intersected at a point. This point is called the
consumer's equilibrium (Corona virus: People saving more but get little in return, 2020). It is a
condition in which demand and the supply of a commodity are equal to that of a producer. When
the quantities ordered compares with the quantity provided, it is called quantity balance. At a
price where market forces match for a commodity, it is called price balancing. It is affected by

changes in production and the availability of products due to different reasons available to the
customer. These variables also shift the location of price and quantity demanded. It moves from
right to left in the event of a drop in production. In the event of a reduction in the production of a
commodity, it moves from upwards to downwards.
Thus the above mentioned laws of economies help to evaluate the business conditions of a
region. It can be done by incorporating or measuring aggregates for evaluation at a macro level.
Which requires combined demand and supply, consumer supply, industrial balance, etc? In the
modern world, they work together to make better decisions and to formulate strategies and plans
in the economy.
Major factors determining positive and negative shifts in retail industry
Due to the pandemic crisis, the United Kingdom has undergone significant crises in numerous
sectors. The market for retail products has been hit by the shutdown and the government has
imposed controls (Corona virus: What are the rules for face masks or face coverings?, 2020). As
a result, the retail industry has experienced big changes in diverse markets leading to
manufacturing stoppage and full lock-down circumstances after a pandemic. This has led to both
positive and negative results in the retail market. The following are the key factors influencing
market retail demand in the United Kingdom.
Local demand factors- Business powers, including demand and supply, are subject to
convergence with each other on the UK market. There is a maximum at which these powers can
be combined, and that limit is set at the level at which the buyer is able to spend out his money
on a particular product available (Covid: How does the extended furlough scheme work?, 2020).
During the time of the COVID-19 epidemic, there was a risky lockout scenario, where people

were trapped in their homes and there was little clarity about the prospects of the nation's
economic state. Owing to the lockdown, there has been a serious effect on the supply of factors
and as a result, the company divisions have been halted and a large portion of the secondary and
primary market i.e. has been halted. These divisions were badly disrupted which made the
quantity supplied totally flat in the market. The physical market was the biggest influence this
phase of the pandemic. Due to various precautionary steps implemented by the government,
citizens of the country did not have daily access to physical sector. The general population too
was not involved in going to the store because they were scared of coronary infection. Both of
these factors also resulted in a growth in the selling of goods and services via the online
marketplace. Items, such as facial masks, sanitizers, etc., have been included in the list of
important products. Holding of items such as toilet paper, convenience shops, antibacterial wipes
has been found, and has resulted in a variety of retailers implementing capping limits on a
number of products.
Complimentary and substitute goods: There are two categories of products of their application
or function and these are replacements and related goods. Substitute goods refer to other services
and products which can be used or which may serve the same function for the original product.
These replacement goods are also shown to have a competitive environment. To explain this,
numerous retail stores are present on the market. All of these labels have the same function and
can be quickly switched by the consumer (NATIONAL RESTRICTIONS: FINANCIAL SUPPORT
FOR JOBS AND BUSINESSES, 2020). On the other side, complementarily products can be
defined as those which are sometimes used. If one of the items is absent, the other product would

not be able to satisfy its function. For instance, pasta and the sauces and supplies needed to make
rice. If one item is absent then that, another would not be abolished in order to serve its function.
In the above case, it is very obvious that there is a common market for goods increase. During
the corona virus era, shifts in patterns and demands were very evident on the UK market. For eg,
public products with different brands have a competitive aspect in demand, whereas they have a
complementary nature for vital products. Citizens were willing to purchase any and all of them
out of fear of market scarcity and also for non-essentials, it showed tough competition in online
purchasing patterns for citizens had a lot of spare time that they used to study several choices
before they choose the final one. Product lines in necessities, such as food stores, saw stockpiling
as mentioned earlier, whereas for non-essentials, they saw no shift than the normal demand
existence.
The income effect and shifts in employment: Wage effect is a rise in the market for products,
which increases as a result of a change in the buying power of the consumer arising from their
income. In the economy, as capital gets pumped in the income cycle, it is claimed that one
person's spending is the income of yet another individual (Rishi Sunak promises £350bn
emergency rescue package for business, 2020). For instance, when customers pay for any
commodity, they pay on that item, which results in the profits of the vendors. After that,
distributors can become consumers as they buy products from another individual.
Purchasing limits, subsidies and other government intervention: There is no direct presence
of the UK government officials in the sector and its powers on normal trading days. Rather, they
engage themselves in the implementation of price limits on in only certain goods and services.
This will continue to keep these items available for the general population (Stimulus package for
UK's poorest families vital, report says, 2020). This whole procedure is carried out in order to
protect the common public's interest on a wide scale. This mechanism is referred to as the price
limit which results in a number of inefficiencies such as inefficient resource distribution and
resource wastage and the provision of poor quality goods, etc. Another way that government gets
involved in the sector is through price flooring. This method is just the reverse of the above
described process, since it involves setting the price of a given good and service at a rate and
firms are not permitted to market the property at a higher less than that of the agreed price. It is
the government's responsibility to monitor the level of increase on the economy so that there is
no panic in the state's financial climate. Schemes such as furlough have been implemented with

the main objective of safeguarding the employment of thousands of people who are integral to
the resurgence of demand driven by the UK market (Substitutes and complements U.K. Grocers
limit items to avert a new wave of stockpiling, 2020).
Task 2
Main UK governmental and economic policies to aid economic recovery from loss of
consumer retail spending.
The UK Government has adopted numerous measures to promote economic growth and to
generate stability in various operations. The United Kingdom exists on a hybrid economic basis
with social roles contributing to governance measures such as regulatory mechanisms and the
introduction of initiatives to promote economic growth. This tends to affect business dynamics
by adjusting macro-economic indicators such as tax rates, bank rate increases, market activities,
etc. The effect of corona virus on the environment has driven the government to strengthen its
economic status in a number of ways (UK consumer spending approaches levels last seen before
coronavirus, 2020). Which requires discounted retail goods, investment programmes for
accelerated recovery and steps for the retail sector, etc? As the retail sector has undergone large
fluctuations which have had an effect on the economy as a whole the market for different goods
has declined. These items include luxury goods including such watches, trendy clothes, home
decor, etc., durable household goods, including kitchenware, plastic materials and other non-
recurring items. It has raised the use of products for everyday use, which are required for the life
of individuals. It has improved the demand for the requisite goods on the product retail sector.
The Government has used strategies to sustain the balance of money in an economy.
Following are the policies and initiatives taken by the UK Government for economic stability
and growth leading to an increase in consumer spending.
Poverty program
This is a policy initiated by the UK Government to alleviate poverty for society and to provide
decent services for individuals. It is crucial that the government takes the right steps and
implements an ambitious policy that is critical for the elimination of poverty in society. After the
critical situation of COVID 19 many people are impacted by life and have an effect on the
United Kingdom's economic structure. This has placed additional pressure or burden on
individuals to completely fulfil basic requirements and services (Video games top list of pocket

money spending in lockdown, 2020). The Office for Fiscal Accountability has estimated that
there is a risk that unemployment will increase by 9.1% in 2020. In order to efficiently and
adequately resolve the problem, the United Kingdom Government's poverty policy would aim to
solve poverty problems as well as minimise detrimental effects on the COVID 19 crisis situation
and raise unemployment.
Government transfers and subsidies
As per the Government's programme, it has been agreed that the governance of Scotland,
Northern Ireland and Wales, for the purposes of bailing out their economies, would inject a
further £16 billion. Under budget loans and incentives, it has been decided that £1.1 billion has
been allocated to industry councils for the purpose of offering business support in order to
rebound from economic stress or crisis. Small companies can earn up to £3000 a month for good
business operation.
Industry specific measures
The Government of the United Kingdom has a range of packages aimed at safeguarding
particular sectors and its workers working in the region. Furlough is one of the big schemes
declared by the government (Covid: How does the extended furlough scheme work, 2020). This
policy has been formulated in order to prevent a vast number of workers from being laid off in
terms of wages and employment. In this system, half of the workers' wages will be charged by
the government in this regard and the remainder will be actually paid itself. Employers and
employers would be covered by this middle way.
Stimulus packages
There are steps to improve consumer demand put in place by the UK Government to balance
market trends. This is done by borrowing packages worth GBP 330 billion for retail companies
and those trying to live in a slowdown economy (Substitutes and complements U.K. Grocers
limit items to avert a new wave of stockpiling, 2020). The government has released €20 billion in
financial assistance as an emergency aid plan to support companies. In contrast to this the
government encouraged borrowers to borrow mortgages by freeing up or lowering their
deadlines. Often, adjustments to the government were going to be considered for the IR35 rules
and the payroll job laws were stopped. Thus the government is providing stimulus measures that
can further improve the economy as a whole. It concentrated on employment openings to save
people from job cuts, which again contribute to higher market demand for a stabilised economy.

CONCLUSION
It can be inferred from the aforementioned article that consumer spending influences the
economy as a whole. The economy is based on the demand and investment of the state and the
person of the nation. Factors that affect market forces are person's wages, commodity price,
supply curve and other variables, etc. Owing to the pandemic, the sector has had a significant
effect due to the lockdown of conditions and limitations on the running of a company. These
issues lead to a breakdown in the economy without production and a decrease in the demand of
commodities. Goods that are essential are consumed, leading to an expansion in the consumer
retail availability of essential goods. As a result, some retail products in the UK have had
significant implications due to uncertain demand and supply powers. For this administration, big
measures have been taken to support the turnaround of the UK economy and to affect market
demand for stability.

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