Impact of COVID-19 and Brexit on UK's Contemporary Business Environment

This report analyzes the impact of the pandemic on the UK's economy, government and Bank of England's response, and the likely impacts of Brexit on the country's contemporary business environment. It discusses the major economic responses of the UK's government and Bank of England, including loan schemes and reduced interest rates, and the immediate and future effects of Brexit on the national economy. The report also covers the impact of COVID-19 on various industries, such as hospitality and tourism, and the loss of jobs and decline in GDP.

Contemporary
Business Environment

Executive Summary
In world, UK's economy is considered ad fifth biggest economy and it is highly developed.
Purchasing Power Parity state that it is ninth biggest and 20th first biggest by the GDP per ca pita.
UK is fifth biggest exporter and importer at global level. Purpose of this report is to analyses
effect of pandemic in UK's economic growth and what actions are taken by its government in
order to overcome form these impacts. Banks of England has also introduced some scheme to
support SME. This report also discuss impact of the Brexit on economic growth in UK.

Table of Contents
Executive Summary...........................................................................................................................2
INTRODUCTION .............................................................................................................................4
Impact of the COVID 19 on UK's economy ................................................................................4
...........................................................................................................................................................5
Major economic responses of UK's government and economic implications...............................5
Major responses of Bank of England and their implications to UK's economy...........................7
Likely impacts of the Brexit on UK’s economy..........................................................................8
CONCLUSION .................................................................................................................................9
RECOMMENDATIONS.................................................................................................................10
REFERENCES.................................................................................................................................11

INTRODUCTION
Contemporary defined as belonging to the same time period and better understanding- its
as business environment that has vast competitive market which keeps changing at a fast pace and
owner of such enterprise must be eligible enough so that to can understand the requirement and
growth that need to be done in organization to grab fast responses of the business (Barr and et. al.,
2018). During COVID 19 pandemic has created the major loss of employment within every sector
or industry at global level. This report will be based on the impact if pandemic on the economy
with UK and government's measure to response this situation. Furthermore, focus is paid on the
measure taken by the Bank Of England towards COVID 19 with their implication of the UK's
economy. It will also include the immediate and future effect of the Brexit on national economy
condition.
Impact of the COVID 19 on UK's economy
Economy of UK has get impacted by different way due the COVID 19 as its various
industry including hospitality, tourism and other get exposed in a direct way to COVID 19
restriction (Thareja, 2020). Due the the restriction in pandemic, it has create the situation to shut
down the business, declined in GDP, decrease in the importing and exporting of goods and many
people loss their jobs. As there was a low demand of the goods and services due to this the product
level also goes down that resulting into decreasing in to sales and shout down of business has
major impact on the economy.
Low supply and demand of goods and services has resulted tin the less utilization of the
labor and capital inputs in production (Xie, and Redding, 2018). This lead to this company has
faces loss and also reduced the capital income and profit of many organizations. Uncertainty take
place when organizational capital expenditure had declined and their existing order also get
cancelled (Belyaeva, 2018). During pandemic, Office For Budget Responsibility has figure out
that there is possibility of falling GDP around 35% whereas as per the National Institute of the
Economic and other social research has forecast of falling the GDP around 15 to 25 %.
In April 2020, UK has borrowed around £299 billion that was highest amount that has
borrowed by this country since 1946. as per the calculation of Office For National Statistic, net
debt of the public sector has enhanced by around £2,004 billion in the July form approximately

£227.6 billion over some past years that increase the country debt's by around 100.5% of the GDP
(Covid-19 drives UK national debt to £2tn for first time, 2021).
Business organisation in UK has get impacted by the Lock down as hospitality sector in
this country has lost around 660000 jobs during 2020. As per the Office for National Statistic's
regular update, in in seven business were get collapsed during this time period. Due to pandemic
around 22 % working people had been furlough (COVID-19 in the United Kingdom: Assessing
jobs at risk and the impact on people and places, 2020).
During pandemic, oil price was declined by around 17%, due to this, British Petroleum
suggested that oil consumption would be declined up 0.5% at world wide. Education system also
get impacted by the COVID 19 as it effect the pre primary level to the tertiary level (Chapman and
Macht, 2018). Tourism sector get a hard hit by pandemic as it became risk for around 50 million
job. All sectors from the agriculture to hospitality get impacted by the pandemic and and its
restrictions as it has caused risk for many jobs and business due to which economic growth of
country get decreased.
Major economic responses of UK's government and economic implications.
During second wave, cases of the COVID 19 were increased continuously in UK. Due to
this, UK's government has implemented many restrictions including ban on entertainment and
tourism industry, closing of the non essential shops, social distancing and testing of virus became
mandator (YANG, and et. al.,, 2020).. During 2020, UK's economy was shrunk by around 9.8%
as the business investment and household consumption get decreased even though government
authority has taken the measures in order to support the country's economy. Government of UK
has implement the tax and spending measures so that they can support the families and household.
These measures include:
 Give a support to the enterprise by providing grant for the small business, repayment for
the sick leave and tax holiday.
 Under Universal Credit scheme by spread out payment of the vulnerable people.
 Make facilitate extra funding for charitable trust, public services and NHS.
During pandemic, three loan action plan are announced by the UK's government. These scheme
are Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption
Loans Scheme and British Business Bank. These scheme were declared with the purpose to

support business within nation. In order to create employment, a package of the measure was also
announced during July 2020. In this, it give around £1,000 per furlough employee to
organisations, provide a minimum payment for the six month for approximately 25 hours every
weak to the young employees (Cumming, 2018).When its come about second lock down, then
UK's government declared some new measures during November 2020. these measures includes
increasing of grant for the Self-Employment Income Support Scheme, expanding date for the
loans guaranteed by country's government until January end 2021 and extension of Coronavirus
Job Retention Scheme until March end 2021. there are some other measures including,
Incremental of the Universal Credit, Bounce Bank loan, Eat Out Help Scheme, Tax Payment
Referrals, Furlough Scheme, Job retention Scheme, Self- Employment Income Support Scheme,
Kick Start Scheme and Mortgage Holidays were implement by government in order to recover the
economy from pandemic impact. Some of these measures are mentioned below:
Job Retention Scheme- Government has launched this action plan on 20 march 2020. in this
scheme, those business operators who's business is get impacted by pandemic could claim grant in
order to maintain their business again irrespective of their sector and size (Fehrer, Woratschek
and Brodie, 2018). This scheme is applicable for those people who have been furlough that means
they were put on leave at the time of COVID 19. reimbursement on every employee that an
employer could seek was also limited and payment for the furlough workers wee not below by
80% of their monthly salary or above £2,500 in a month. This plan was extended until 30
September 2020 instead of March 1st, 2020. UK's employer having their account in the UK bank
started PAYE payroll scheme before October 30, 2020 are eligible to utilizes this scheme. In this
shcme, around £17.5 billions was claimed and approximately 8.7 million workers had ben
furlough.
Eat Out Help Out Scheme- In order to support the hospitality sector, government has introduced
this scheme on 8 July, 2020. In this hospitality organisational opened again after the Implication
of COVID 19 lock-down. In this plan, government provide a fund of around 50 % for the food and
other non alcoholic drinks in all restaurants of country. Customer avail this offer many time as
they know that there was not restriction on number to claim this offer. Government launched this
scheme with the purpose to encourage people so that they return to restaurants that help them to

recover their economy. Across the 78116 outlets, around £849 million wee claimed. Average
claim on a person was approximately £5.24 and overall claim was above 160 millions person
meals. This scheme was beneficial fro every one regardless of the income.
Bounce Bank Loans scheme- This scheme was introduced by Chancellor on may 4th 2020.
purpose of this scheme is to support the small and medium sized business. This scheme contain
COVID Corporate Financing, and Coronavirus Large Business Interruption Loans Coronavirus
Business Interruption Loans (Fung and Gunasekara, 2021). This scheme plan is for those SME
business and sole trader who were operating their business efficiency before pandemic but after
facing loss due to the COVID 19. The banking and finance industry has also provide their support
to the business during this critical time period. Banks provide loan between the 2000 to £50,000
up to the maximum of around 25% yearly turnover to UK's citizens. Government cover the
interest rate for first 12 month and interest rate set up by 2.5% as well as it provide guarantee to
lenders (BOUNCE BACK LOAN SCHEME, 2021). To take benefits of this loan, it is mandatory
that business is established within UK and is tax resident. Duration of this loan is for six month
without charging any early repayments.
Self-Employment Income Support Scheme- UK's authority has announced this scheme on 26th
may 2002 for those people who are self employed and in partnership and loss their business
income due to pandemic. Those people who've annually profit of below than around £50,000 and
get half of their earning from the self employment can claim a taxable grant worth 80% of their
monthly trading profit over a time period of the three years up to around £2,820 for the three
months (COVID-19: Self-Employed Income Support Scheme, 2021). In this grant, all payment are
subjected to the National Insurance contribution and Income tax. Second round of this plan was
declared on 29th may for those people who are gravely impacted by COIVD 19 and after the 14th
July 2020. Moreover, government has also declared 3rd, 4th, and 5th round of this scheme plan.
Major responses of Bank of England and their implications to UK's economy
During pandemic, Bank Of England has played a vital role as it help the working
population, business and also help to reduce the damage caused in economy due to the COVID 19.
in order to exploit the impact, banks also worked with the HM government. Several measures are

taken by the Bank Of England to respond the pandemic. Certain of measures are mentioned
below:
Sustenance of Government Bonds- Sustenance of Government Bonds has worked with the HM
government in order to provide a support to the larger business organisation by offering them cash to
pay their debts. It help the organisational to provide employee's salary and payment to their suppliers
timely even if they have problem of the cash flow (Gupta, 2021). There is a scheme for the small and
medium sized enterprise, in which it help the business with a turnover of around £45 millions for
taking the government backed finance around up to £5 millions. In order to give support to SME,
government give 80% guarantee to the lenders. Bank of England offer a new loan facility to big
organisation which are suffering from disruption of the cash flow. COVID Corporate Financing
Facility make it easy top purchase the short term debts which are known as commercial paper that will
provide a quick and cost effective way to enhance their working capital. Banks also motivate the other
banks for supporting small business through their Term Funding Scheme for all the SME scheme.
Reduced Interest Rate- Bank Of England help the household and other business by providing cheap
loans as they has cut down their interest rate by 0.1% in UK. Monetary policy committee in a meeting
has increased the UK's government's holding and corporate binds by around £200 billion. To help
household and other small business, Bank's three policy committee has announced a package, while
Chancellor of Exchequer has declared many measures with the same motive on same date (LIU, LIU
and CHEN, 2020). This merge package of the measures were accompanied by HM treasury's
announcement of the COVID 19 Corporate Financing Facility. The CCFF provide funds to the non
financial business so that they become able to pay salaries to workers, rents and suppliers. Monetary
policy committee has organised a meeting where it was unanimously voted in order to minimize bank
rates by around 15 basis point to the 0.1% to enhance holding of the Bank of England of the UK's
government and sterling non financial investment around £200 billion to the £645 billion (Our
response to coronavirus (Covid), 2021).

Likely impacts of the Brexit on UK’s economy
When there was British exist from EU during Brexit. UK voted to leave the EU in 2016, there
are several consequences faced by the country due to the Brexit. These impact are mentioned below;
Immediate impacts- Brexit, has caused major impacts on the growth rate of UK's economy. Due to
the uncertain outcome, Brexit has slowed the economy growth by 2.4% during 2015. as per the
evaluation of UK's government it would lower the country's growth by around 6.7% in 15 years.
Significant risk are associated with the economy of UK and its different sector that include non EU
business, tourism, GDP, migration, trad relation with the EU nations and many more. Exporting of
goods falls by 41% and the import plunged by 29% as the UK got separate form the EU that result into
unexpected taxes and cost. As Brexit has caused many uncertainty, due to which there is a reduction to
business investment by 6% points and employment decrease around 1.5% points. GDP depend not
just on overall productivity of country ad it is high but more actual data of given production which
have direct implied on import, export and trade which are low in the current scenarios (Mohammed,
2021).
Future impacts
In 2016, as per the survey it was predicted that Brexit would minimize the per capital income
of UK. Based on current scenario, it was predicted that there will be a decline in economic growth by
2 to 8% during 2018. furthermore, as transition period of time is not yet over the UK have to be abide
by the UK's rule and also pay to the EU budget that can create situation more calamity (Pop, 2020).
At this time, there was no deal scenario, GDP of the UK is impacted contrary and shrank enough to
impact unusually .On agreement terms it is predicted that to generate the output loss of around 0.5% of
the GDP by end of the2022 and some 2.25% for the UK. UK is free to apply the trading impact with
another nation as now it is not a part of the EU's single market. It help the country to bring some new
customer formalities and also make control between EU and UK. If the UK trade situation is
considered with the non EU nations, its not going to mend loss caused due to the Brexit as economic
production from these nations is not enough to compensate
CONCLUSION
From the above report it is find out that pandemic has impacted every sector within UK.
COVID 19 has causes a big loss in different industry including cloth industry, hospitality, tourism,
food and many other that impact the country's growth in a direct way. Government put some

guidelines and restriction to reduce impact of the virus on health. The UK government had took
several measures in order to support the household and business. They introduced various scheme
that help the business to pay their debts and salaries. Bank of England has also take certain
measures to help small and medium business. At last, due to Brexit, government bring some new
policy as now they are free with trade with other nations. Therefore, it analysed that government
effort to cope with the pandemic and uplift the economy efficiently.
RECOMMENDATIONS
As pandemic has cause a crisis in the economy, therefore to deals with this crises,
government need to undertake certain actions strongly and rapidly with prioritizing vulnerable
people. government should focus mainly on three main points which are left behind the people and
place, provide support to business and employees and coordinated as well as the responsive
government. Authority should launched some temporary support to the unemployed workers,
vulnerable groups and individual who is facing the anxiety. In order to reduce the virus's spreading
government should paid more focus on the health system. Implementation of the scheme for
supporting the small business and other industry that are gravely impacted by pandemic provide
them a liquidity support. Government should support all the business in nation by helping them in
covering their financial losses at the time of COVID 19 and also extend the sick leave for
employees. To bring growth in economy, government should encourage society, business and
people to work together as it help them to uplift the country's economy. Authority also should
introduced some more loan plans for different industry such as tourism, food and beverage,
hospitality, technology, clothing and other etc. with the purpose to support their business.
Government also should provide some guidelines in order to take precaution and work safety
efficiently.

REFERENCES
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