Leadership and Business Environment Case Study | Desklib

Title Leadership and Business
Environment Case Study

TABLE OF CONTENTS
TABLE OF CONTENTS..............................................................................................................2
INTRODUCTION...........................................................................................................................3
1. Impact of Lock-down on the UK's economy, using the circular flow of income...................3
2. Major economic responses of the UK’s government and their impact on UK’s circular flow
of income.....................................................................................................................................4
3. Analysis of major responses of Bank of England to Covid and their implications on UK's
circular flow of income...............................................................................................................7
4. Impact of Brexit over the UK’s economy...............................................................................8
CONCLUSION................................................................................................................................9
RECOMMENDATION...................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment are basically complex in nature which means that it gets changes
over the period and affects the economy of the country (Kim and Asbury, 2020). The report is
based on the changing business environment and its impact over the UK country. This report will
provide the various questions answer which will present to the government of UK. The report
will discuss the main impact of the lock-down on the UK economy using the circular flow of
income. Further, the report will discuss the economic responses of UK government and their
impact over the country circular flow of income. In addition to this, the report will also analyse
the major responses of Bank of England and its implications on UK's circular flow of income.
Lastly, the report will also discuss the Brexit factor and its impact over the UK's economy.
1. Impact of Lock-down on the UK's economy, using the circular flow of income.
The circular flow of income is a model which state the movement of the money in the five
sectors of the economy. The five-sector circular flow of income includes individual or
households, firms, government, foreign and financial sectors. The impact of lock-down over all
these sectors of the UK economy are as follows:
 Individual or Households: During covid-19 situation, the lockdown has decreased the
final consumption expenditure of individual by 21.6% in the year 2020 (Branley-Bell and
Talbot, 2020). It was because of the social distancing and public health restrictions. The
people of UK have faced the salary cut because of the temporary closer of business
during lockdown and the impact of which their savings has also decreases. The household
saving decrement has affected the spending pattern and consumer income.
 Firms: The lock-down leads to temporary closure of businesses of the UK and the impact
of which the capital expenditure of the company has also decreases over 2020. However,
on the other hand, lock-down has also put an adverse impact over the businesses as their
sales revenue and cash operations are high affected. The firms are unable to earn profit in
the time period of lock-down along with just after that situation. The travel firms have
also faced huge loss in their business because of the lock-down and temporary closer of
movement of people from one place to another place.

 Government: Because of the pandemic and lockdown, the government of the UK has
faces drastic decrement in their GDP and also increase in the unemployment rate. The
GDP of the UK has fell down by 19% in the second quarter of 2020 due to the great
lockdown. Alongside this reduction in GDP, there was a huge increment in
unemployment level which in January 2020, UK employment rate was 4% which became
5% at the end of the year 2020 (Hampton and et.al., 2020). This is because when GDP
decreases, the firms of the country have to close its business and the impact of which
worker have lose their jobs.
 Foreign Sectors: The import and exports of the UK country are highly affected by the
lockdown and pandemic situation as movement of people and goods are strictly restricted
by the government. The impact of lock-down on UK trade is that the imports of the
products and services from other countries has reduced by 31.8% while on the other the
exports of goods and services to other foreign countries has reduces by 18.5% (Hale and
et.al., 2020). It is generally because of the restriction of movement and non-availability of
transports and travel.
 Financial Sectors: The lockdown has also affected the financial sectors of the UK such
as banking, financial institution, financial investment etc. is that the interest rates of the
loans are highly decreased. The financial sectors also unable to get its payment from the
from the clients such as households and businesses. The impact of which they unable to
manage its operations smoothly and continuously. The circular of the income has been
highly affected and damaged because of lock-down.
2. Major economic responses of the UK’s government and their impact on UK’s circular flow of
income
The various pre and post covid responses of the UK government in the pandemic situation
and its impact over the circular flow of income are as follows:
Initial responses:
At the initial stage of the Covid-19, government of the UK has declared the guidance
related to the precautions of the diseases and update the public about the number of cases. It was
released by the Department of Health and Social care and public health England on 22th January
2020. The various initial responses are detected early cases, slow the spread at early stage only,