Contemporary Business Environment: Impact of Lockdown and Brexit on UK's Economy

CONTEMPORARY
BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Explaining the main impact of lock-down on UK's economy.....................................................3
Major economic response by the government of UK .................................................................4
Major responses of BOE..............................................................................................................7
Impact of Brexit on UK's economy.............................................................................................8
Recommendations............................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Mainly contemporary refers to the same period of time. It is a type of business
environment that has a very huge competitive market that have nature to change rapidly. The
proprietor of such businesses must have the proper knowledge and skills in order to understand
the developments and the requirements that are needed by the business to grab the fast response
(Branley-Bell and et.al., 2020). In the report the adverse effect of the covid-19 on the UK
ecomony will be discussed along with the major economic responses. It also shows the Brexit
impact on the economy of the United Kingdom and the steps taken by the BOE.
Explaining the main impact of lock-down on UK's economy
Circular Flow of economy has impacted the economy of UK during lock down in following
ways
Impact of lock down on UK's economy using the circular flow of income are as follows.
Circular Flow of Income model demonstrates that how money moves through the society. Money
flow from producers to workers as wages and flows back to producer as payment for products. It
is the model of the economy in which major exchanges are represented as flow of goods and
services(Dropkin,2020).
The economy was affected by this pandemic in many ways. Many businesses are shut
downed due to the restrictions which are imposed by government during lock down and also
there was severe impact of it on mobility. We even cannot imagine the magnitude of the
recession which was caused by this pandemic in modern times. The first lock down which was
imposed by government of UK in that the GDP of UK was fall downed by 25% than what it was
earlier recorded before 2 months. Due to this pandemic, the economy's different sector has
affected in a different extent. Social contact sectors, which include hospitality and entertainment
was badly hit(Kumari,and et.al., 2020). Some sectors such as financial services was much far
better. Forecasting done by International Monetary Fund(IMF)forecasted a fall this year in the
economy of UK and this time the decline which was experienced in the year 2008 to 2009 was
quite larger.
Government and banks has introduced some policies to mitigate at least some negative
impact of this pandemic in the country. Several policies was also announced by government to

support businesses and workers. With effect from the framework of national accounts,the
anticipated during economic impact of coronavirus on UK, we are explaining here that how they
are going to affect the circular flow of income estimates of GDP(Altman, 2020).
The government budget deficit reached a peacetime record. The government has also
taken some measures to support small households and businesses. As a stock of its past
borrowing ,government debt has inevitably increased. Going into pandemic government debt
was 84%,which is now close to 100%(Jessop, 2020). There was a drastic change in the spendings
of the households. The sales of the retailing sector was declined by 8.7%which was the largest
month to month decrease(Zhou, and et.al.,2020). Though some areas such as grocery stores, non
stock retailers had shown an increase in demand as lock down measure began while other sectors
such as furniture, appliance stores ,hobby stores showed a drastic decline.
The lock down which was caused in UK undertaken post COVID has put 24% of
workforce at risk.(Duffy,2020). The people who belong to the poor category had suffered a lot.
According to the Office of National Statistics ,23%of businesses had temporarily closed or
paused affected by this lock down. Around 20% of the UK working age population had been
furlough because of this lock down(Jallow, and et.al., 2020) During lock down, the economic
activity gone down roughly to 30%. Due to lock down in the UK's economy the concern
regarding gender inequality was also increased.
Major economic response by the government of UK
Major economic response by the Government of UK and its impact on UK circular flow of
income are as follows :
Facilities by government
There was a lot of measures which was implemented by the government, out of which
some of the them are restrictions which are related with travelling, shutting downs of modes
which are related with entertainment and the shops which do not fall under the category of no
essential shops. The government has also sketched a plan for easing the lock down. For business
to be facilitate across credit, the government has launched three new loan schemes. The
government during this situation has also helped those people who are not in condition that they
can do the work and also helped those members also who are the part of their household.