Evaluating the Contemporary Business Environment

This report evaluates the impact of lockdown on UK economy, major economic responses of UK government and Bank of England, and likely impacts of Brexit on UK economy. It also provides recommendations based on the analysis.

EVALUATING THE
CONTEMPORARY
BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
1- Using circular flow of income, explaining the main impacts of lock-down on UK's economy
......................................................................................................................................................3
2- Analysing the major economic responses of the UK’s government and their impacts on the
UK circular flow of income:........................................................................................................4
3- Analysing the major responses of Bank of England and their implications on the United
Kingdom's circular flow of income.............................................................................................7
4- What are the likely impacts of Brexit on the UK's economy..................................................8
CONCLUSION................................................................................................................................9
RECOMMENDATION...................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Contemporary business environment is considered as set of factors that put direct impact
on growth, success and performance of companies, whether it is large or small, public or private.
Contemporary term defines belongingness regarding same period of duration and to better
comprehend business environment which have a wide competitive market that keeps fluctuate
quickly or at quick pace. The current assignment will be based on pandemic, which destroy the
whole world in term of putting negative impact. The study will explain the impact of lock-down
on UK economy and major economic response of governmental bodies as well as their impact on
circular flow of income. Furthermore, the report will justify appropriate responses of Bank of
England & their implications on UK circular flow of income. Lastly, the study will specify likely
impact of Brexit on overall economic growth. It will clarify recommendation based on overall
analysis and impact of COVID occurrence.
TASK
1- Using circular flow of income, explaining the main impacts of lock-down on UK's economy
Pandemic is one of the worst factors that put highly negative impact on economy, as it
destroy the well-being of human and whole world from last three years. Just because of
coronavirus, governmental bodies in each nation has taken decision to shut each and every
sphere of the world, which is quite important for them to do so, as it might be stop spreading
infection due to that millions of people may losses their close person (Niedzwiedz and et.al.,
2021). In the United Kingdom, international monetary fund forecasts the biggest fall and
international economy might be in this year would be wider than decline may experience from
2008 to 2010 global financial clashes. It can be said that circular flow of income is a concept that
is related to economy in which most of the changes are portrayed as flow of products, money and
services between economic agents. The overall process has been affected because of lock-down,
which may do not give individuals and organizations approval to sell their items and serve any
services, excluding health and social care across national boundaries that lead to decline sale and
flow of income.
There are several situations occur in the world, which clearly defines who and what
impact does lock-down put in the context of economy. For example, it affects unemployment
factor totally, in term of driving governments and high authority decision to close the business
world for short time duration, until they do not get any approval to restart that again. Because of

shutting ventures, millions of individuals losses their jobs which directly or indirectly impact
unemployment rate. In the other words, infection provide outcome in term of lock-down and then
this action may reduce labour supply and human resource utilization worldwide, which lead to
decrease economic growth (Upadhyay and Yadav, 2020). Quarantines, social distancing, curtail
mobility and regional lock-downs as well as work place closures disrupt or destroy supply chain
as it also lower profitability & productivity level. Health and social care places may have access
to work independently and appropriate as they are helping others to take better prevention and
stay away from being infected. Furthermore, they may take care of patients who have being
infected due to pandemic or infection. United Kingdom may experience the distinct economic
shrinking since the peak of financial crisis. It's despite the lock-down officially only beginning
on March 23. All over the environment creates situation of lock-down that came into full force
and falls suggest a gross domestic product contract by approx 20% during this duration. Most of
the people, due to job loss attempt suicide, that define their mental health and instability, which
become much transparent in earlier and recent weeks (Chandola and et.al., 2020). It is fact that
12 moths lock-down restrictions helped to control spread of infection, but negatively impact
economy in term of decline GDP and increase rate of inflation.
2- Analysing the major economic responses of the UK’s government and their impacts on the
UK circular flow of income:
A New variant arrived at the end of the 2020, COVID19, it began to spread all across the world
very quickly and also across the UK. With this variant the government responded with respect of
the orders of staying at home. with the most affected areas of the UK regions and also nationally
among the England. Variant increased with the dominant speed and became the dominant among
the UK. this variant it further causes to hospitality, deaths cases. COVID-19, has impacted the
economy and the society as a whole. The UK government has responded with the support to the
various economic and social concerns.
The UK government is committed to support the country whatever it takes, during the
time of pandemic COVID19. The UK government has spent the £280 billion for supporting the
people jobs, services and business across the UK. The government announced at the summer
economic update, for the further support of the business, in response with the public health, and
also announced to give the various additional measures in the winter economic plan (Dicken and
et.al., 2021). The UK government was leading the largest package for the emergency support

with the post war history. Also being highlighted by the bank of England that without taking this
action by the government the situation became much worse. CJRS and the SEISS schemes have
been introduced by the government in CJRS the government supports the employers to maintain
their business, and for keeping their employers on the payroll, with a view for having the quick
return on the production. And in the SEISS scheme the government have introduced this to
support the self employed with the view to support the business operations.
Since the period of COVID19, the UK government also had taken the switch off actions
to save the lives and also support the damage being occurred in the economy (Galeazzi and et.al.,
2021). the government also has provided the economic package which support the businesses
and the individuals during the course of pandemic. The government was able to provide
significant economic support as the UK entered in the strong public finances. According to the
chancellor it is being said that it is not appropriate to borrow at the current level. Its the
responsibility of the government for providing the finances once the economy recovers, to return
to balanced fiscal position.
Government support to the care homes and resident staff in the social care sector which
ensure the emergence grant funding of 4.6£ for addressing the pressures being caused by the
pandemic(Gore and et.al., 2021). And over 1.1£ billion paid out to the infection control fund to
prevent and control the transmission of COVID19. The government also recognises the role for
the career play, during the difficult times, the need for the support groups including the day
services was being given by regularising the salary and not stopping the pay off.
In addition, the government also provided the regular testing for the staffs and for those
who are extremely at high-level risks (Loomba and et.al., 2021).The government have provided
them the prediction model(Q COVID) which takes the personal factors and also identifies the
person with higher risk which should be prioritised for the vaccination. The government have
also found that some of the groups of society have imported badly by the pandemic. Which
includes minorities, deaths of the black Africans and many more which was 2.7 times higher
than the white British men. Across all these groups multiple underlying the socio economic
factors which contributes to high risks and to the death rates (Poyser and et.al., 2021).The UK
government has also introduced the 3 march budget, plans with respect to pandemic for the
further support to protect the jobs and the livelihood across the UK.
Economic impacts on the circular flow of income

With the economic support of the UK government during the time of pandemic it has
further impacted the circular flow of income .The impact on the circular flow of income mainly
includes the production, income and expenditure. The IMF (international monetary fund) have
forecasted the global financial crises. This has reflected the flow of income which reduce the
labour supply, and also the quarantines, lock downs and social distancing and the workplace has
disturbed the supply chain and lowers the productivity.(Economic Policies and the Coronavirus
Crisis in the UK, 2021). It has also effect the income declines, lay-offs, and highlighted
uncertainty that has the great impact on the flow of income and GDP.
Further, the resolution foundation shows about the outbreak duration, the public health
restrictions and the social distancing measures had the initial economic impacts. these all are
helpful to trace the effected economy during the reopening that has effected the GDP and the
circular flow of income. Through all of these economic benefits the level of production is being
lowered with response of the demand of the goods and services in the UK. Will resulted in
falling in the sales and the business closures. And the labour supply has also effected by staying
home, and many industries broke down and the supply chains lowered the production occurred.
COVID 19 has adversely impacted on the demand and supply, the services will leads to
lower use of the labour capital and capital inputs in the production process. Also the fall in the
level of the employment and the working hours will lower the compensation of the employees-
mainly the wages and the salaries . (United Kingdom Government and institution measures in
response to COVID-19, 2020). There will also be regular growth of earning when the level of
labour supply increases in the market. The reduction in the capital income also effected the gross
operating surplus, which results in the fall in the various industries profit. . Resulting in the
falling of mixed income of the self employed people.
The schemes ( CJRS and the SEISS ) have directly impacted the GDP and the flow of
income. The income included in this must be treated in the national accounts and with the public
sector finances which reflect the international position. The CSJRS is recorded as the other
subsidies in the production from the government to the employers and the remuneration by the
employer to employees as the wages and salaries. The SEISS will be recorded as the Oher
subsidies on the production given from the government to the mixed income and the self
employers.

3- Analysing the major responses of Bank of England and their implications on the United
Kingdom's circular flow of income.
Bank of England falls under the category of leading financial service providing
organizations in the UK. Its mission is to deliver financial stability and monetary for people of
the United Kingdom. In the context of pandemic and Lock-down, organization and its high
authority may take strategic decision as it may response to overall situation in form of cutting
interest rate up to 0.1%, just to help people to live their life normally, instead of dealing with
poverty and lack of food that they are unable to purchase according to needs due to pandemic
(Our response to coronavirus (Covid), 2021). During the worst situation of COVID-19, it may
act to support economy and save jobs of millions, which is important and beneficial too. Its
management may put in place a package of measures to assist many companies and people's in
jobs. They may also support to minimize long time damage to economy in term of forming a
policy or plan.
For example, they may take action to set monetary policy, for purpose of maintaining
price stability, which is quite essential for them to do so in the context of controlling circular
flow of income. The main objective of this bank is to effectively maintain monetary stability in
the nation and oversee financial balance of nation's financial system in effective manner. By
cutting interest rate, which considered as nation's official IR, Bank of England offer cheaper
loans to individuals, for personal or professional reasons. It may also offer a loan according to
need and households. This type of response might be reduced costs faced by companies and a
household in the United Kingdom (The UK economy: Insights from the Bank of England’s
Citizens’ Panels, 2021). Along with this initiative, it may do more in term of offering building
communities and banks long term funding at interest rates at 0.1 percent. It can be said that more
funding may give to bank that increase their leading.
Bank of England response pandemic situation that impact on UK economy in varied
terms that are appreciable and tremendous. For example, top authority and stakeholders of
chosen financial service organization may take decision to provide additional and valuable
support to other banks that enable them to offer more lending to medium and small size
organizations. As it drive their performance toward success through which they may benefit each
stakeholder whether it is consumers, workers, government, etc. In order to maintain circular flow
of income, bank may work closer with governmental bodies in the United Kingdom to support

wide ventures in term of offering them require cash for their business debt. It may help each
company to keep paying their candidates and suppliers wages on the basis of their work and
effectiveness. It may assist continues flow of products and services as well as other things supply
between two nations economies that provide in return unexpected benefits to all.
4- What are the likely impacts of Brexit on the UK's economy
There are several factors or forces available in the world of business, that impact progress
of economy. For example, Brexit is one of those external forces that may put negative impact on
UK's economy in term of reducing nation's potential gross domestic product (GDP) by approx
4% in the long duration (Billing, McCann and Ortega-Argilés, 2019). It can be said that the
affect of this factor on economy might be recognized as the worst impact in long run era as
compared to pandemic. Gross domestic product is an important way that used to show how
appropriately or ineffectively an economy is running. Their negative impact on economy may
directly or indirectly affect standard of living in the UK, which is quite essential for
governmental bodies to enhance even better than last eras, because it may contribute to make
business sector productive, profitable and competitive in form of globalization (Brown, 2019).
Just because of Br-exit decision, UK residents may losses their jobs as they are working in those
companies that move to EU after separation, which may put negative impact on human well-
being and their life as well. It may break cooperation and trade contract between two nations,
which lead to decreasing trading operation effectiveness of organizations, UK. All above
consequences are not beneficial for rapid growth of economy that is essential for nation's
progress. It may lead to increase stress level of individual person, firms and ventures. It affected
in term of decreasing net population between 2019 and 2020. It may contribute to increase
inflation rate and unemployment as well, which is not suitable for the growth of any country in
the world that tend to grow (Facing up to the UK’s post-pandemic, post-Brexit challenges,
2021).
On the other hand, it may put positive impact on UK economy in term of providing
individual person chance to start-up their own business and work with those companies who may
have established their ventures or outlets across national boundaries (Dhingra and et.al., 2018). It
may contribute to increase GDP and enhance growth of economy even better than before. It may
provide organizations chance to build their relationship with other firms across domestic frontier
who are capable to run their businesses and cater benefit to each stakeholder. It may drive the

attention of varied enterprises toward developing interdependency, which in return give key
advantages to them in form of business expansion, that may help to increase profits margin. They
may grab this chance to develop plan for expanding or establishing own outlet abroad where
success and growth chances are available in bulk (Klaar, Carver and Kay, 2020). Along with
above positive aspects, Brexit may encompasses more. For example, just because of this factor,
existing companies in the UK may increase demand of human resource, which drive their effort
to hire skilled and talented people who are efficiency and effective to achieve set goals. It leads
to decrease unemployment ratio, and increase more than 1975, with 76.1 percent of individual
aged 16 – 65 in work.
CONCLUSION
By summing up above analysis, it has been summarized that by taking strategic decisions
and developing effective plans, governmental bodies in the UK has handled critical situation of
pandemic. It has also taken approach to provide free food services to those people who are
unable to purchase that because of poverty and job loss. By taking initiatives to support needy
individuals, they have dealt with overall situation effectively. Furthermore, from above
discussion, it has been concluded that interventions and methods utilized by UK's government
has contributed to enhanced living standard of individual person, which is quite essential and
beneficial for them to do so appropriately. They effort to provide job facilities to residents has
benefited everyone in term of providing them reason to be happy and feel capable to fulfil their
basis need, for which they ready to work harder than ever that is necessary to survive for longer.
RECOMMENDATION
 In order to enhance economic growth and develop it even better, governmental bodies
can take approach to provide loan facilities to needy people with less interest rate that is
beneficial for economic progress. As it enables individual person to take decision to
apply loan for commercial purpose, which give them power to start their one business. In
the recent time, just because of high interest rate, individuals to not take action to drive
their attention towards new business start-up that in return provide them a lot of benefit in
bulk. With the help of this decision, they can provide employment chances to UK
resident’s, who are facing challenges to enhance their living standard even better than
before.

 Along with above suggestion, they could move toward more recommendations that help
to achieve desire outcomes and provide unpredicted benefits. It can be said that Bank of
England and other financial service providing companies can take initiative to overcome
the negative impact of Brexit and pandemic. They can hire skilled and talented
employees who are capable to perform specific or varied roles in banking sector with
utilization of the best and most required managerial competencies that an employer
needed and tend to find among new candidates.

REFERENCES
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