Evaluating the Contemporary Business Environment

This report covers analysis about economic impact of COVID-19 on the UK's economy and about economic response of UK government. It also covers major responses of Bank of England and their implications on UK's economy. The research has been done on impacts of Brexit on the UK's economy.

Evaluating the
contemporary business
environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
UK's economy economic impact on COVID-19 ………………………………………….. ……3
Major economic response of the UK's government and their economic implications....................4
Major responses of the Bank of England and their implications to the UK's economy..................7
Impacts of Brexit on the UK's economy..........................................................................................8
RECOMMENDATIONS...............................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is defined as the internal and external forces that affect how
company functions. It includes employees, customers, management and business regulations. It
covers factors and forces such as customers, suppliers, government, competitors, technological
and legal conditions. According to contemporary business environment it considers applied
aspects of environmental processes and fundamental and human impacts on the
environment(Arda and et.al., 2016). For all kinds of businesses, COVID situation has made the
environment very complicated and restricted as well. This report covers analysis about economic
impact of COVID-19 on the UK's economy and about economic response of UK government.
This report covers analysis about major responses of Bank of England and their implications on
UK's economy. The research has been done on impacts of Brexit on the UK's economy.
MAIN BODY
UK's economy economic impact on COVID-19
Pandemic situation act as in the negative form with respect to performance of UK's
economy due to which it has major impact on business world. In the year of 2020 UK'S GDP has
declined by 9.8% and economy has to face steepest fall in terms of its performance. UK GDP
was 25% lower in April 2020 as it was two months earlier in February during its first lock
down(Aro-Gordon, S. and Chandrashekhar., 2016).According to economists, the economy has
adapted well to the lock downs with a smaller decline in economic activity which was recorded
in early 2021 and GDP has fell by 2.5% in January (Economic impact to date, 2021). According
to economic outlook of year 2021 it has been observed that when economy has reopened into
slower pace then economic indicators suggest that economy is under phase of strong recovery.
The GDP growth is of 6.5% which is 4.8% up from two months ago according to economists
(Bissonnette and De Koninck., 2017). Due to this pandemic situation, public finaces of
UKcountry have also been strongly affected. In year of 2020/21 government's budget has
reached to its peacetime record where tax revenues fell and government spending has increased
on a large scale.

UK's economy has to face various kinds of challenges at the time of pandemic situation.
According to OECD, among major economies UK is one of the country which is majorly hit by
this pandemic situation. In year of 2020, economy of Britain is fall down by 11.5% slightly
outstripping falls in countries such as Italy, Spain, France and Germany. By the government's
lock down restrictions, UK's service based industry has been majorly hit(Bratton, ed., 2020).
Service sector which includes financial services, hospitality and tourism has been hit in a very
bad manner and it takes about three quarters of UK’s GDP to make up its situation. According to
Shadow Chancellor Anneliese Dodds, pandemic situation has been majorly hit UK economy and
this has been proved by current evidence from OECD.
When government has faced failures in terms of health management and in that case the situation
has become worst (Wang, 2016). In this pandemic situation, position of UK country has been
observed in terms of unstable manner and government has also does not show any proper
concern about it. This is the main economic impact on UK’s economy due to this pandemic
situation.
Major economic response of the UK's government and their economic implications
UK government has taken various kinds of steps in terms of improvement in UK's
economy and for further growth of nation it has been implemented into positive manner.
Nation’s health is the first consideration and for that purpose government has taken various kinds
of initiatives towards it. Government ensures about this initiative that people who are suffering
from coronavirus has to receive the best medical aid and this has been considered as their first
priority(Ercegovac and et.al., 2020). Government has taken various steps with respect to
supporting business of country where an initial £330 billion of government and guaranteed loans
as well. It makes a material contribution to wage bills and salary(Our plan to rebuild: The
government's COVID-19 recovery strategy).
To help UK businesses, Bank of England and HM treasury provide schemes related to financing
on larger scale for purpose of making continuous flow of cash into the economy. Government
has introduced some schemes such as scheme related to job retention, scheme of apprentice,
traineeship scheme which act as strong point in terms of employment.

The cooperation between University of Oxford and AstaZeneca company is a major step which
contributes in terms of manufacturing of COVID-19 vaccine and this is the first priority of
government to save their public by fully vaccinated them. The government has made more focus
towards research into vaccines, tests and treatment which includes £250 million to the coalition
for epidemic preparedness innovation which is the largest contribution in any country (Frunzaru
and Leovaridis, C., 2016). For making a continuous flow into the economy, government has
taken step towards online business and by suggesting business firms to give major concern about
online delivery system so that it will contribute in restricting movement of people into public
places.
Operators of communal spaces and employers have to be innovative with respect to creating
novel approaches and this has been instructed by government. The department of nation's
research and innovation focused on adopting approaches and new technologies which help UK
country to mitigate the impact of this pandemic situation. Government of UK has created a
roadmap for professionals where there is no need to work at work place and they can do their
work from home in this pandemic situation. Government has given freedom to particular sectors
that they can't shut down their businesses in this pandemic situation because these sectors are
considered under essential services. In this pandemic situation, country's small businesses have
been majorly affected due to which many people have lost their jobs and in this manner it has
created negative impact on the performance of country's economy.
Government has also taken initiative towards taxation area where UK government announced
that taxpayers can choose the deferral option in terms of VAT payments.(Measures of tax-
indirect and direct)The UK government has taken step that VAT payments can be deferred at
taxpayer option. The deferral option chosen by taxpayer and these deferred sums must be paid
on or before 31 March 2021(Gómez and Titi., 2016). UK government has also announced a
temporary reduced rate for the hospitality and tourism sector so that they can run their business
into proper and positive manner. (Coronavirus(COVID-19))
When there is effective contingency plans in terms of long term manner it is easier to quickly
vaccinate people of their whole country(Leonidou, and et.al., 2015).UK government has taken
step towards by spending over £280 billion for purpose of saving and supporting people’s jobs,
public services and businesses across UK country and also announced additional measures in the
winter economy plan. Government has also spent over in terms of supporting and saving people's

jobs, businesses and public services across the UK country and also announced the additional
measures in the winter economy plan. In terms of financial help and it's not possible to save
every kind of job so for that purpose government has tried to focus on major sectors of economy
so that they can save maximum number of jobs.(Our plan to rebuild: The government's COVID-
19 recovery strategy)
Government of UK has ability to save their country and also it has ability to take steps in
stronger manner because it has strong public finances even in this crisis situation. Government
has also serious about those people who are identified as clinically vulnerable and prioritise them
for vaccination purpose (Lee and Paik., 2018).The UK government has also taken efforts in order
to save people from COVID who are tirelessly working in adult social care. They have taken
initiative in such a manner through adult social care winter plan to save people under care which
includes those people who are with learning disabilities from this pandemic situation (Protecting
the most clinically vulnerable people). The government also recognises about residents who
needs their support and they have also provide extra support to their visitors. For saving their
economy they have taken various kinds of measures from every aspect so that proper circulation
in the economy can be maintained into continuous manner.
UK government has proper strategy to overcome themselves with support of plans and different
kinds of policies. UK government has announced a full recovery plan with a full budget which
contains COVID-19 recovery policies and also with support of winter economic plan they have
taken initiative towards improving their economic condition. They have stressed over on those
conditions which includes maintaining proper hygiene conditions, maintaining social distance
and also on frequent cleaning so that every people of country can understand this serious
situation in terms of this difficult situation.(How can we protect others and ourselves if we don't
know who is infected) In this way, UK government has taken various kinds of measures and steps
towards improving the economic condition of a nation.
Major responses of the Bank of England and their implications to the UK's economy
Bank of England has adopted some measures which will help in terms of keeping people
in jobs and firms in business while supporting in terms of minimising the long-term damage to
the economy. Working in a closer manner with HM government so that they can coordinate in
maximising their impact towards positive actions taken for pandemic situation.

 Bank of England cut their interest rate to 0.1%: Bank of England has taken step
towards cutting 0.1% interest rate for cheaper loans for businesses and households in
terms of lower interest rate (Longe., 2017). In this way, it will reduce the costs which is
incurred for further development faced by households in UK and businesses.
 Banks getting help from Bank of England to cut interest rates on lending: They are
also helping in terms of cutting interest rates on their lending and also have taken
initiative towards long-term funding for building societies at 0.1% closer interest rate. In
this manner, by the individual person it will reduce the interest rate charge. They are also
providing maximum support to banks who offer lending to SMEs companies and also
give more funding to banks which increases their lending. (Helping banks through
cutting interest rates on their lending)
 Give support to businesses in terms of paying their staff and suppliers: Bank of
England has taken initiative in terms of supporting businesses for purpose of paying their
suppliers and staff. They have supported in terms of paying wages into continuous
manner and large businesses by offering them cash for their corporate debt and to their
suppliers even in case of cash flow problems. Bank of England has taken steps towards
reducing amount of financial resources that banks have been set against lending to UK
households and businesses. They have also supported banks in terms of expanding
lending. (Helping businesses by paying their suppliers and staff).
With respect to implication part of UK's economy, it has been observed that economy start
recovering itself and again take lead in terms of service industry. While supporting in this
positive manner businesses start performing in a better pace manner(Cohen, and et.al., 2017).
Cash flow has become faster within UK economy by support of Bank of England measures taken
for positive development of country.
By supporting various kinds of businesses they are successful in keeping people in terms of
working phase so that people can't remain unemployed even in this difficult situation. They are
able to hold accounts when bank has taken initiative towards cutting interest rates and can
support in terms of borrowing money from individuals which directly supports in maintaining
circulation within the economy (Meilă., 2018). With support of Bank of England to other banks
they can generate revenue for nation in terms of increment in their GDP percentage which got
reduced due to this pandemic situation.

When Bank of England give support to large businesses then they are able to keep people in
employed position and able to run essential services within the economy. In this way, Bank of
England plays a very important role in terms of their economic implication.
Impacts of Brexit on the UK's economy
BREXIT is basically was the withdrawal of United Kingdom from the European Union
and it is the first country to left EU after its forty-seven years of membership. It has great impact
on business deals with other countries of European Union when UK has taken exit from
European Union(Vinichenko andet.al., 2016). From European union to united kingdom there
was effect of BREXIT in terms of long anticipated manner on the disruption of flow of goods
and services. There are some businesses which responded towards stockpiling of goods while
having tariff-free trade between UK and European Union. With impact of Brexit, it has affected
the supply chain as well and also there was disruption of the flow of goods and services from UK
to EU.
Both sides of channel has affected by withdrawal, if continue to keep good relationship with EU
suppliers, trade across borders and giving transparency in terms of trade practices. According to
the new rules after Brexit, it has been observed that around 17% of surveyed companies have
ceased their export trade with Great Britain on a large scale.(Chen, and et.al., 2015). There were
22 % suppliers from other countries and further 13 % were there to replace imports with support
of local suppliers.(Economic impact of BREXIT).
With Brexit decision there are many industries which have been affected by this kind of decision
and also faced some potential economic impacts which includes reduced investment and
recession and also have some manpower issues in terms of migrated workforces and skilled
worker shortages(Wang., 2016). With respect to UK's economy, it has it's permanent impact on
growth of productivity and also have some large effect on the UK's future growth. Brexit is a
kind of decision due to which new barriers have been introduced with EU in terms of non-tariff
barriers to trade and tariffs and are likely to reduce trade flows and economic growth (QUERCI
and GAZZOLA., 2016). In this way, it has impacted the UK's economy on a very large scale and

country has to face various kinds of negative situations due to which it is difficult for country to
maintain a consistent level of GDP percentage.
Brexit has its great impact on UK's economy where country has converted from net exporter to
net importer of energy in which trade pattern has been affected by deterioration in North Sea oil
production(Van Nam and et.al., 2020). Country can't grow on their own pace as compared to
their previous situations because UK's economy has to face slowing down situation. It has
majorly affects country's policies and also affect future trade policies which reduced the British
international trade(Yeng., 2018). In this way, Brexit plays a very important role in terms of
affecting UK's economy.(Short term impacts of BREXIT)
CONCLUSION
The above stated report concludes that It has been concluded from above report that
business environment is very essential from every aspect for development of business as well as
for country's performance. The pandemic situation has created negative impact on the
performance of UK economy. UK government has taken proper initiative towards improving
condition of their country and also about their financial condition. The pandemic situation has
badly hit the small businesses as well as contribute in creating negative impact on the overall
performance of the country. Financial institutions have made certain alteration with respect to
interest rates and different kinds of policies. When UK country left the European Union then it
has impacted various kinds of business deals due to which UK's economy get into the slower
pace. Due to this BREXIT situation,it has become difficult for UK country to make a strong
stand in the international market as well as in context of financial parameter.
RECOMMENDATIONS
In above report, two topics were covered which includes COVID and BREXIT situation.
For improvement in this context following points needs to be followed in terms of positive
improvement.
 Banks need to focus on needs of customers on continuous basis to support trhem in terms
of recovery from COVID-19.
 To drive efficiency and resilience banks have to adapt their operating models
 Risk management thresholds need to be reflective of broader economic changes and
greater attention must be given to more challenged customer segments.

 It has been recommended that government has to taken step for supporting economic
support packages which includes direct cash transfers,tax breaks.
 Government has to support women workers in terms of income security and needs to
implement systems of social protection and gender-responsive
 There is a requirement to provide benefits to informal workers and social protection as
well. Unemployment compensation can help ease burden of financial aspect and
payments of social security for workers in the informal sector.
 In context of BREXIT situation, it has been required that different countries must be
invited for purpose of investment so that UK economy can reach to the next higher level.
 Deals with those countries who do not have any tariff barriers can act as a strong point in
improving performance of UK economy.

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