Evaluating the contemporary business environment

This report evaluates the impact of COVID-19 and Brexit on the UK's economy and the major responses of the UK government and Bank of England. It covers the strategies of UK government in response to the pandemic, the main economic impact of COVID-19 on the UK's economy, and the likely impacts of Brexit on the UK's economy. It also provides recommendations for further enhancement.

Evaluating the
contemporary business
environment

Table of Contents
Introduction......................................................................................................................................3
Explain the main economic impact of COVID-19 on the UK’s economy..................................3
Major response of government of UK along with the implications.............................................5
Analyse the major responses of the Bank of England and their implications to the UK’s
economy.......................................................................................................................................7
What are the likely impacts of Brexit on the UK’s economy?....................................................9
Conclusion.....................................................................................................................................11
Recommendations..........................................................................................................................11
References......................................................................................................................................13

Introduction
In current time, the economies of different countries are highly affected by the impact of
the COVID-19. The ongoing pandemic has affected employment, business, and daily life of
people. With the impact of COVID-19, a great decline has been noticed in the sales & revenue of
the business entities. In addition to this, it has also slow down the growth of economy at global
level (Townsend, 2020). The present study aims to identify the impact of the COVID-19 and the
suitable steps have been taken by the government of UK and other higher authorities. It will
cover the strategies of UK government in response of pandemic. In addition, response of the
bank of England and its implication of the economy of UK has also been discussed in the
following report. Further, it will include impact of Brexit on economy of the country along with
the suitable recommendations for further enhancement.
Explain the main economic impact of COVID-19 on the UK’s economy
The coronavirus make an impact on the UK economy in many ways that is started from
shutting down the businesses to limit down the mobility. The magnitude of the recession make a
cause for the growth in pandemic and it is unprecedented to the growth of the company in
modern times. The GDP is declined by the 9.8% in 2020 of UK and it was the steepest drop
since the consistent change in 1948. Most of the times UK government tried to overcome their
issues but they fails due to the major impact of Covid-19 on their growing economy. During the
first lock down, UK GDP was decline as it was recorded 25% lower in April 2020 (Ahmed and
Alam, 2021). economic activities are picked up over the spring and summer season of 2020 and
make a reflection on the opening up of economy. Furthermore, the declining growth of second
lock-down was much less that the first lock-down. A strong recovery is needed that is led to
make a rebound growth in GDP, which was recorded as 2% lower in July 2021 than before the
pandemic occurrence (Coronavirus: Economic impact, 2021).

This pandemic make high impact on the different sectors to the economy for analysing
the use of different degrees. There are different sectors that get impacted through social contact
including entertainment, hospitality,financial and travelling industry. After recovering strongly
from the economy and different economic growth that is appear slow in the financial year of
2021. It is analysed that the inflation has been risen over in 2021, partly as the result of supply
chain problems and another reason is to cause for consumers spending. This inflation is rise and
expected to continue into 2022 (Appiah and et.al., 2021). another important impact of Covid-19
on UK economy is their labour market and the spending behaviour of their customers. Therefore,
it can be said that Covid-19 shows a great deal of uncertainty over the economic outlet and make
a strong impact on sustained recovery for the growth in resurgence of virus that make a strong
impact on UK economy.
Illustration 1: Coronavirus: Economic impact, 2021

In order to solve this pandemic impact, government and central brand are introducing
different policies and designed to mitigate the negative economic impact from the pandemic
occurrence. In UK, different policies are announced by the Government and Bank of England
support the different business activities and workers of UK. The main reason for using these
measures are related to keep businesses afloat in different ways. It include the financial support
for the growth of business, workers and wider public growth during the pandemic. All of these
make a significant impact on the economy to reduce the economic uncertainty within the
environment (Aspara, Grant and Holmlund, 2021). This pandemic and make a strong impact on
future deficits and it will depends on virus and how much the permanent damage cause for the
growth in economy. As economy recovers, spending support and make businesses is falling to
make a growing impact on the tax receipts. Government debt has inevitable increase from 84%
of the GDP to 100%.
Major response of government of UK along with the implications
The COVID-19 has proved a serious issue for different nations across the globe. It has
negatively affected the economy of countries at global level. Government of UK has adopted
several measures so that they can minimize the effect of the pandemic. For controlling the
transmission, government took the first step of imposing lockdown in the country. The cases of
deadly virus were increasing across the nation rapidly. In order to control the situation,
Illustration 1: Coronavirus: Economic impact, 2021

government not only imposed the lockdown but also formulated the norms related to social
distancing, sanitization and more. It was mandatory in the country to follow the guidelines
strictly. In this regard, an act called as Coronavirus Act, 2020 was formulated by the government
of UK. Through this act, government got special rights in certain areas such as nhs, Schools,
social care, local councils etc. Hotels, restaurants, pubs got closed for a particular period of time.
In this situation, there were strict restrictions on roaming around the roads without any valid
reason. The major policies of government of UK to deal with COVID-19 were quarantine, lock-
down, limited travel and so on (Colbourn and et. al., 2020).
The COVID-19 has been declared as the outbreak by the world health organization.
Though, response of the government of UK was not prompt. By pursuing the approach of “herd
immunity”, government issued the guidelines of hand wash, social distancing etc. It was declared
that the whole family members need to complete the quarantine of 14 days, if one family
member gets infected. Additionally, education institutions and other places of public gathering
remain closed with a view to control the transmission (Fontanella and et. al., 2020). Further,
strict lockdown was imposed in the entire country and people can only step out when they are
need of essential items such as medicines, groceries and more. Shops of non-essential items got
closed in order to minimize the social gathering. There were strict restrictions on weddings,
birthday parties and other such social events.
Fiscal policy was also formulated by the government of UK as the response towards
COVID-19. The country recorded total loss of 18 million Euros during pandemic. This budget
was announced in association of Bank of England. Here, the announcement has been made to
reduce down the interest rate for small business units by .50%. Additionally, grants were also
provided to the Nhs to treat the COVID patients appropriately. To meet with medical
emergencies, a separate fund was maintained. In addition to this, government used to provide
support to such people who are in self-isolation and could not move from one place to other
(Yeh, 2021). Apart from this, announcement has been done about working tax credit and
universal credit. This scheme benefitted nearly 4 million individuals across the nation.
Subsequently, £7 were offered to the people to boost their existing income level.
In response to the COVID-19, a new fiscal program was introduced by the government of
the country. They introduced CJRS for the first time in the nation. Main aim of this policy was to

enhance job opportunities in UK. The people who were not working but on the pay-roll,
supported by the grant of £2500 per month. Behind undertaking CJRS, the main objective was to
address the impact of the COVID-19. Initially, CJRS was only formulated for the period of 3
months. Later, it was extended multiple times in order to minimize the impact of COVID-19. In
2020, 8.9 million jobs were created due to the respective policy. This program cost to the
government nearly 35.4 billion. In july 2020, job retention bonus was also announced by the
government (Economic Policies and the Coronavirus Crisis in the UK, 2021). Additionally, job
support scheme was introduced for the benefit of such employees who were working only for
one third of their total working hours. Hence, several response were taken by the government of
UK with an aim to deal with the situation of the COVID-19 effectively.
Implications
After going through the above discussion, it is found that UK government is taking suitable
steps in order to curb the transmission of the virus and minimize its impact on the economy. For
this purpose, they structure ample of policies in order to address the negative impact of the
pandemic effectively. Here, implications of the policies are outlined below:
 Lockdown was imposed by the government so that people cannot step out from their
place. Due to increasing number of cases, they formulate the norms of social distancing.
Events got cancelled and shops of the non-essential items also got closed. It is identified
that UK government not only prepare the norms but make sure that all the necessary
policies are implies properly in order to ensure maximum benefit of the citizens within
the country.
 As economic response, grants announced by government so that business units can
continue their functions. Here, government also provided support and assistance to
individuals who lost their employment during pandemic. In this context, they implement
suitable schemes and policies in order to support the unemployed people in an efficient
manner.
Analyse the major responses of the Bank of England and their implications to the UK’s economy
The Bank of England is the UK's central bank which has been used for providing mission
and financial stability to the UK people. It play a significant role to help the UK business and

different households for manage an economic shock to prove the growth in the market. In the
pandemic situation of Covid-19, the Bank of England has set different packages to measure the
response and help the business for the growth in minimizing the long term damage (Thomas,
2021). Some of the business are able to work and make a responsive nature to the global
pandemic and provide an implication in the UK economy that are discussed below:
 Cut down the interest rate to 0.1%: With the special monetary policy committee
meeting, we cut the interest rate and make growth in major challenges. Bank rate is one
of the UK official market and being able to provide the interest rate preferences. It is one
of the single important interest rate in UK or it can be said to base rate of the different
financial products (Barta and Görcsi, 2021). Lower the interest rate for being cheaper for
the growth of business and households. It will be related to make a cost that is faced by
the business and use different households in UK market.
 Help the other banks to cut interest rate on their lending: The bank is offering for
building the societies and make long term funding at the different interest rate or close to
different factors at 0.1% (Gibbons, Fernando and Spedding, 2021). This will make
reducing interest rates for charging growth rate in funding values. It will increase on the
basis of banks lending profile and providing them an additional support for lending the
small companies.
 Helps in paying their staff and suppliers: The Bank of London worked closely with
the government to support the large business organisation and offering them cash or
monetary funds for their corporate debts. This will be useful for analyse the different
paying wages and suppliers in effective monetary terms. It will be helpful for managing
the bank and build the different forms of society to fund the management practices and
make a focus on the supporting companies. This make a development and completing the
payment of their staff and supplier for the success in future.
 To expand lending in other banks: Their task is to reduce the financial resources that
bank and another building societies for using against their lending business household.
The UK agreed not to pay and provide divided to the different stakeholders in 2020.
Many of the UK banks are not agreed to pay any kind of dividends for different
shareholders in different challenging environment (Khalique, Ramayah and Shaari,
2021). It will be helpful for most challenging environment to provide dividend to the

rating system and make prudent dividend for accrued to paid out in different ways. The
main work of Bank of London is able to provide temporarily reduce the regulatory to
make a placed on them in different manner (Our response to coronavirus (Covid), 2021).
What are the likely impacts of Brexit on the UK’s economy
Economic consideration is one of the important impact on the economy which scrutinise
and vote the government's EU withdrawal agreement. This will be helpful for make a systematic
economic impact of Brexit as it will lead to the significant changes in UK's relationship with the
different European countries that could be reopen and make different opportunities to negotiate
the deals with non-EU countries.
Current impact of the Brexit on UK's economy:
There are different immediate perspective which is helpful for organising the growth of
UK's economic growth. It was expected that after the separation of UK and EU membership, UK
will likely to have long term impact that is helpful for make a significant growth in UK. As per
the view of National statistics, the goods are considered for the growth and it exported to pushing
the UK inflation that is 1.7 % in 2017 and make an annual cost of £404 for the growth of British
households (McManus and Amara, 2021). The impact of the Brexit start from the different
activities and use across a range of core metrics that will include the growth of GDP in different
manners. All of these are considered for the growth in household spending and employment
opportunities to provide insight growth on the Brexit on UK economy, property and global
market. It is analysed that different economic and major sectors are associated to the growth of
the UK economy. It will be helpful for the economy to analyse the perspective of UK and apply
on the outcome of EU that are useful in considering the major changes in technical progress and
immigration channels.
Future impact of Brexit on UK's economy:
There are different perspective that is helpful for economists to forecasted the agreement
on UK and EU for analysing the adverse impact on the British economy. The UK has make an
estimation on the upcoming years are make an adverse impact on the economy due to the Brexit.
It is estimated that approximately 6.7% of the economy is observed by the employers for make a
shortage for analysing the economic growth that is compared to the economy (Nudurupati,

Garengo and Bititci, 2021). Therefore, it is analysed that most of the companies make impact on
foreign direct investment due to the major EU impact on UK's economic growth. This will be
helpful for make a direct impact on the different trading volumes of UK in different manners.
Most of the impact of Brexit is basically depend on the trade settlement for analysing UK market
for negotiate the opt to found new policy system in different manner. The significant risk of the
Brexit is helpful for associated to EU-UK market and they failed in reverting the UK economy
while following the terms to trade that is effective from 1st January 2021 (Brexit and the UK
economic impact, 2021).

Conclusion
It is monitored through above –stated information that COVID-19 is the major issue that
is facing by different countries globally. It has a major impact on the economy and also affected
the employment and growth opportunities in the country. It is analyzed that COVID-19 influence
the growth, employment, health of people in UK. In response, government has been take suitable
steps and also implied those steps in order to meet with the negative impact of the pandemic.
Further, Bank of England also reduced down the rate of interest and also structured suitable
policies so that people can meet with their financial requirements in uncertain time. Additionally,
brexit also has a major impact on the economy of UK and also influences the businesses of the
country. In this, situation, it is important for the government and higher authorities to analyze the
situation and prepare suitable policies accordingly.
Recommendations
The COVID-19 has been increased the uncertainties to a great extend. It is affected
business practices, sales of companies and daily life of individuals within the country. To face
the uncertain situation, certain recommendations are mentioned below:
 It is suggested that government needs to be proactive and prepare suitable policies in
order to deal with uncertain situations. In this situation, they need to maintain a
contingency budget so that it will be easy to face future uncertainties. This will not only
help the government to maintain efficiency but also assist in minimizing the negative
effect of COVID-19 on the country.
 It is analyzed that small business entities are adversely affected by the pandemic. In this
situation, government of UK needs to maintain separate funds so that they can support
small business units. SMEs play a crucial role in growth and success of economy of the
country. By getting support of government, it will possible for small units to operate
business significantly. It will allow them to continue the business operations in order to
get success in future period of time.

 It is suggested that Bank of England needs to formulate suitable policies in order to
provide financial support and assistance to the people of the country. Providing loans on
lower rate of interest with fewer formalities will be prove helpful for the growth of the
economy.
The above mentioned recommendations are crucial in order to deal with the impact of the
COVID-19. By implementing these suggestions, it is possible for the individuals as well as
business organizations of UK to address the adverse impact of the pandemic.

References
Books and journals
Ahmed, F. and Alam, M.A., 2021. Business Environment: Indian and Global Perspective. PHI
Learning Pvt. Ltd..
Appiah, G., Bonsu, S.K. and Sarpong, D., 2021. The unpowered customer: Co-creation as tactics
of the weak. Journal of Business Research, 133, pp.317-326.
Aspara, J., Grant, D.B. and Holmlund, M., 2021. Consumer involvement in supply networks: A
cubic typology of C2B2C and C2B2B business models. Industrial Marketing
Management, 93, pp.356-369.
Barta, G. and Görcsi, G., 2021. Risk management considerations for artificial intelligence
business applications. International Journal of Economics and Business Research,
21(1), pp.87-106.
Colbourn and et. al., 2020. Modelling the health and economic impacts of population-wide
testing, contact tracing and isolation (PTTI) strategies for COVID-19 in the UK.
Fontanella and et. al., 2020. Neurosurgical activity during COVID-19 pandemic: an experts'
opinion from China, South Korea, Italy, the USA, Colombia, and the UK. Journal of
neurosurgical sciences, 64(4), pp.383-388.
Gibbons, B., Fernando, M. and Spedding, T., 2021. Innovation Through Developing a Total
Enterprise Computer Simulation: Teaching Responsible Decision Making. Journal of
Management Education, p.1052562920987591.
Keulertz, M., Mulligan, M. and Allan, J.A., 2020. The impact of COVID-19 on water and food
systems: flattening the much bigger curve ahead. Water International, 45(5), pp.430-434.
Khalique, M., Ramayah, T. and Shaari, J.A.N.B., 2021. Intellectual entrepreneurship and future
success of Pakistani SMEs. International Journal of Business and Globalisation, 27(4),
pp.524-535.
McManus, J. and Amara, M., 2021. Sport at Home, Sport in the World: Evaluating Qatar’s
Sports Strategy from Above and Below. In Contemporary Qatar (pp. 137-152).
Springer, Singapore.
Nudurupati, S.S., Garengo, P. and Bititci, U.S., 2021. Impact of the changing business
environment on performance measurement and management practices. International
Journal of Production Economics, 232, p.107942.

Thomas, R.K., 2021. Strategic planning. In Health services Planning (pp. 215-245). Springer,
New York, NY.
Townsend, E., 2020. COVID-19 policies in the UK and consequences for mental health. The
Lancet Psychiatry, 7(12), pp.1014-1015.
Yeh, S.S., 2021. Tourism recovery strategy against COVID-19 pandemic. Tourism Recreation
Research, 46(2), pp.188-194.
Online
Economic Policies and the Coronavirus Crisis in the UK, 2021. [Online] Available through:<
https://www.tandfonline.com/doi/full/10.1080/09538259.2021.1897254 />
Brexit and the UK economic impact, 2021. [Online]. Available through:
<https://ihsmarkit.com/research-analysis/brexit-and-the-uk-economic-impact.html>.
Coronavirus: Economic impact, 2021. [Online]. Available through:
<https://commonslibrary.parliament.uk/research-briefings/cbp-8866/>.
Our response to coronavirus (Covid), 2021. [Online]. Available through:
<https://www.bankofengland.co.uk/coronavirus>.