Impacts of Lockdown on UK's Economy and Government's Response to COVID-19

Contemporary Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
The main impacts of lockdown on the economy of UK using circular flow of income ......3
The main impacts of lockdown on the economy of UK.........................................................4
The major economic response of the UK's government ......................................................5
Major responses of Bank of England and their implication on UK's circular flow of income7
Impact of Brexit on UK's economy........................................................................................8
Conclusion.......................................................................................................................................9
RECOMMENDATIONS...............................................................................................................10
References .....................................................................................................................................11

INTRODUCTION
Contemporary Business Environment is referred to the modern business environment
which keeps on changing rapidly in a competitive market. The management of the businesses
operating in this environment need to be aware and capable enough to cope up with these
changes with efficient strategies. Major factors affecting changes in a contemporary business
environment are Political and Legal environment, Economic condition, Physical and
Technological environment, Cultural society, etc. The Central Bank of United Kingdom known
as Bank Of England was established in 1694 in Threadneedle Street, London. The Bank
operates as UK government's bank with reserves worth 101590 million US dollars. Bank of
England charges a interest of 0.1% as Bank rate from commercial Banks. It is among the oldest
Banks of the world, being the eight-oldest Bank. This report will be analysis determining impacts
Covid-19 over Uk's economy and government's response to those impacts. Further,
recommendations are provided to tackle up these impacts for a smooth circular flow of income.
Main Body
The main impacts of lockdown on the economy of UK using circular flow of income
Circular flow of income helps to demonstrate that how money circulates in the society
because an economy is an endless circular flow of money. The main sectors which are involved
in the circular flow of income are the foreign trade sector and the government trade sector (Mao,
2018).
Circular flow of income contains three approaches to measure the GDP which are as follows-
Production
It focuses on the value of the output of goods or services which are produced. It is clear
that the covid lead to reduce the sales and also the lower level of production. Moreover, there are
some industries which experienced an increase in production in response to COVID-19.
Income
It focuses on recording the value of income which is generated by the production of
goods or services and the additional taxes on the subsidy of production of products. The severe
impact of the COVID-19 on the demand and supply of goods or services in the UK market lead
to decline in in the use of labour with capital inputs in the whole production process (Lloret‐
Climent and et.al.,2018).

Expenditure
It focuses on the value of the sum of all the final expenses within an economy. Due to
pandemic, the consumption of household stuff would reflect how non-spending is expected to be
lower. Businesses may be expected to reduce the capital expenditure and more cancellation of
orders.
The main impacts of lockdown on the economy of UK
COVID-19 has lead to contraction in the UK and global economy and led to decline in
the demand for goods and services. The pandemic was declared a public health emergency which
leads to fall in the global economy of UK and it has negatively impacted on the financial market,
travel, employment and number of industries. The UK workforce was at risk due to the
lockdowns. The various impacts of lockdown on the economy of UK is explained below-
UK's Public finances
The UK economy has a large financial services industry whenever there is a change in
the output that will directly impact the explicit and implicit charges by financial intermediaries.
The pandemic has played a main part in current supply chain issues across the UK. The
pandemic has led to slashed economic forecasts. Circular flow of income reflects that how the
covid tends to reduce the supply of labour, due to regional lockdowns and social distancing leads
to curtail the mobility with lower productivity. The UK's public finance have been hugely
affected by the economic shock caused by the pandemic as the government's spending increased
which lead to fall in the tax revenue .The government has also increased. The banking and
finance industry worked so hard to support all the customers so that the impact of Covid-19 for
the businesses and households in the UK (Socci, 2019).
Tourism Sector
Travel and tourism are one of the largest industries all over the world. The Covid-19 has
affected the the tourism sector and creative industries the most. Monthly air passengers arrivals
to the UK fell as the UK government has restricted the both UK and in worldwide reducing the
tourism for large period of time. The tourism industry has affected a lot in the Covid-19
pandemic. While taking the decisions for travel destinations, tourists travel risk & management
perception are crucial matter. The pandemic has ruined all the previous development
Impact on jobs