Evaluating The Contemporary Business Environment - Impact of COVID-19 on UK Economy

Evaluating The
Contemporary
Business Environment

Executive Summary
The UK's is fifth largest economy and one of the most developed country in world. According to
Purchasing Power Parity (PPP), it is ninth largest and twenty first largest by GDP per capita. The
country is fifth largest importer and exporter in world. The purpose of this report is to examine
the impacts of COVID-19 on the economic growth of UK and the respective measures
undertaken by the government so as to overcome the concerning impacts. The schemes
launched by Bank of England to support small businesses and households in the COVID-19
pandemic are also been mentioned in this report. The impact of Brexit upon the economic
growth of the UK is also discussed in the report. .

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY ..................................................................................................................................4
The main economic impact of COVID-19 on the UK’s economy..............................................4
The major economic response of the UK’s government and their economic implications........5
The major responses of the Bank of England and their implications to the UK’s economy......8
The likely impacts of Brexit on the UK’s economy...................................................................9
CONCLUSION..............................................................................................................................10
RECOMMENDATIONS .......................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
COVID-19 is a contagious disease which was discovered in Wuhan, China, in December
2019 and spread of this disease was worldwide (Mölling, Schütz and Becker, 2020). COVID-19
has majorly contributed in the rise of health crises which has severely impacted upon global
economy as well as daily lives of the people across the world. This pandemic has created major
loss of jobs in every sector worldwide and severely impacted all the businesses sectors (Carr and
et. al., 2021). In this report, the impact of this pandemic on economy of UK and what measures
government has taken in response to it have been discuss. Furthermore, the report focuses upon
on the suitable measures taken by the Bank of England in response to COVID-19 and their
implication on the UK's economy. The last section of this report contains the immediate and
future impacts of Brexit on the economic conditions of country.
MAIN BODY
The main economic impact of COVID-19 on the UK’s economy
The COVID-19 pandemic has impacted economic conditions of the UK in many ways.
Lock-down restrictions in the country has caused shutdowns of many businesses, loss of jobs,
decline in GDP, decrease in exporting and importing of products. The decline in production level
due to lower demand of products or services which results into falling in sales and businesses
closer has majorly impacted the economy of UK. The sectors such as tourism industry,
hospitality industry and many more that are directly exposed to COVID-19 restrictions has also
been impacted by the same. (Conefrey and et. al., 2021).
The reduction in the demand and supply of products or services has resulted into less
utilization of labour and capital inputs in the production which has further lowered the capital
income as well as led to severe fall in the profit of various companies. In this pandemic scenario
it was estimated by “Office for Budget Responsibility” that GDP may fall up to 35% while the
“National Institute Of Economic and Social Research” has estimated that it may fall between
15%-25 (Sales, 2020).
It was expected that there would be an impact on the employment of UK and
unemployment rate. To fight with this pandemic, government has spend funds which resulted
into borrowing of money. From April 2020 to 2021, the country borrowed approximately £299
billion which was the highest amount the country has borrowed since 1946 and the debt on