Contemporary Business Environment: UK Economic Analysis - BABS

This report provides an analysis of the contemporary business environment in the UK, focusing on the economic impacts of COVID-19 and the war in Ukraine. It examines the damage to company goodwill, increased unemployment, and price increases resulting from decreased demand and su...Read More

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Executive Summary
The business environment is basically defined as various factors or forces which is
analysed by organization for maintaining positive atmosphere in workplace area. With help
of keeping positive work atmosphere employees within organization are able to do their task
with full passion and interest. The report will cover the details explanation of effect of
COVID 19 in the economy of UK. It further covers the economic effect of the war in Ukraine
on the UK, major recommended economic responses of UK government and their
implications. Due to the effective response of government small and medium organization
easily developed their infrastructure strongly and also enhanced their portfolio within short
duration.

Table of Contents
1. Introduction.......................................................................................................................................3
2. Discussion and Analysis....................................................................................................................3
2.1 Impact of COVID-19 on the UK’s Economy –............................................................................3
2.2 Economic Impacts of the War in Ukraine on the UK...................................................................4
2.3 Major Recommended Economic Responses of the UK’s Government and their Implications –..5
2.4 Major Responses of the Bank of England and Their Implications to the UK’s Economy............7
3. Conclusion.........................................................................................................................................9
4. Recommendations...........................................................................................................................10
5. References.......................................................................................................................................11

1. Introduction
The term business environment is basically defined as combination of various factors
and forces which is utilized by many organizations for run their activities smoothly. Due to
keeping effective and positive business atmosphere the various companies are able to deliver
high and standard services and goods to users for long duration. With help of positive
business environment firm is able to identify the requirements of user in quick manner. But at
the time of COVID 19 there are various impacts which are produced on the economy of UK
on various aspects and due to this various organizations are not able to run their activities in
smooth manner. Due to the impact of COVID the market of UK is totally get disturbed
(Alajoutsijärvi, Kettunen and Sohlo, 2018). The report will cover the details explanation of
effect of COVID 19 in the economy of UK. It further covers the economic impact of the war
in Ukraine on the UK.
2. Discussion and Analysis
2.1 Impact of COVID-19 on the UK’s Economy –
There are various impacts which are produced in the economy of UK due to the impact
of COVID 19. The impacts are damage in company goodwill, enhancing unemployment,
increase of prices in goods and services and others. The main reason for occurring these types
of issues is that the demand and supply of product are highly decreased in market which leads
to decrease the sale and productivity of various organizations. The main reason for enhancing
unemployment rate in the economy of UK is that due to the impact of COVID on employee's
health many employees’ loss their job. Due to this many organizations’ loss their skilled
workers. But for solving the issue of COVID 19 the government of UK initiated strategies
such as lockdown and other. But real fact is that due to implementing this type of strategy
companies with in UK and other locations loss their potential clients and need to fix huge
price in their goods and services. The main aim of fix heavy price in their goods and services
for balancing the level of profit margin and demand and supply of products in market. But
due to enhancing heavy price lower- and middle-class segments are not able to buy the goods
and services of various companies within low time.
The other major impact which is produced on the employees within various
organizations is that their salaries are become half. Due to this they are not able to survive
their life in decent and proper way. It leads to enhance conflict between employee and

employer at higher rate because the satisfaction level of employees in the job are highly
reduced. Due to this the overall performance and productivity of company are highly
decreased for long duration. During the time of COVID 19 social work and human health
activities facilities the largest negative contribution in the UK economy and market. Because
they are coming in the category of emergency services and their activities are highly essential
for protecting the life of people. The main reason for producing negativity in the health
services is that at the time of COVID company faced lot of shortages in their vaccines (Farah,
Ramadan and Harb, 2019). Due to the shortages of vaccines many companies are not able to
protect the health of their employees. In COVID when company is collapsing then they
decided to establish new type of strategies and policies which is highly beneficial for
employees regarding their safety within organization and also for enhancing the sale of their
goods effectively. The most important strategy which is used by various companies as per the
guidelines of government for enhancing their profit and revenue at higher rate are keeping
cleanliness and hygiene in workplace area. In aspect of service industry monthly service
resulted by 0.3% in August 2021, with the food service sector and accomodation faacilitates
the strongest contribution in positive manner by 0.28 percentage points of positive growth to
GDP, and social work and human health functions provides the largest contribution in
negative manner by 0.42 percentage points of negative growth to GDP.
2.2 Economic Impacts of the War in Ukraine on the UK
During the time of war in Ukraine on UK various kinds of economic impact are
produced which are described below -
 Inflation – During the time of war prices of various company products and services
are highly increased in form of inflation. Due to occurring this kind of inflation the
citizens of the UK is not able to fulfil their basic needs in time which leads to
decrease the goodwill of company effectively. At that time the price of goods are
raised around 30% - 50%. Due to occurring inflation in the price of products the reach
of company product and services are effectively reduced. Due to high inflation rate
distribution channel or supply chain of various companies are not worked in
systematic manner.
 Unemployment – At the time of war in Ukraine unemployment are highly increased
in various organizations. Because during that time companies faced huge financial in

their business regarding the sale of their goods and services. For recovering that loss
and saving the money company decided to terminate those employees whose
performance are not good or very poor. Due to enhancing unemployment the talent
and unique ideas of young generations are not utilized properly.
 Shortage of stapled food - Due to occurring this kind of war, citizens of UK did not
get quality food products from organizations for long time. Because at that time
various food companies are tried to facilitate their products to users without any type
of packaging. Due to this the quality of the products are highly decreased which is not
good for customer health. Due to reducing quality in food products by organization,
customers easily spread negative word of mouth globally which leads to decrease the
revenue and popularity of food industry effectively.
2.3 Major Recommended Economic Responses of the UK’s
Government and their Implications –
Due to the negative impact of COVID 19 or war in Ukraine government of UK
considered various types of factors for provide support to various organizations and also for
enhancing effectiveness. With help of considering various factors government is able to
decrease the impact of COVID 19 on UK economy effectively.
 Increase of public spending – Due to the effective and major involvement of
government spending between public, economy of the UK are highly improved within
low time. Because due to heavy involvement of public or government spending job
opportunities are highly increased for young generations (Geall and Ely, 2018). Due
to enhancing job opportunities the lifestyle of employees are society are totally
disturbed. With help of enhancing public spending the basic needs and desires of
customers are easily fulfilled by company for long time. Due to the effective
enhancement of public spending by government the demand and supply of product are
easily stabilized for long duration. If spending is concentrating on developing then it
leads to enhance growth and performance in long-run aggregate supply. But if this is
concentrate on welfare advantages or pensions, then it decreased inequality, but it
could crowd out more performing private sector investment. Increasing public
spending is also essential for enhancing the value of various organization
economically. Because enterprise have direct relations with government regarding the
activities of enterprise.

 A cut of import duties on crude oil – Due to cutting down the important duties in
crude oil the economy of UK in agriculture sector are totally changed. Because when
import duties are reduced then the farmers are able to sell their crude oil to normal
customers and big industries at beneficial price. In comparison with other responses, it
is the biggest step which is taken by government for the welfare of normal citizens
and business man. Due to cutting down import on crude oil the price of the company
product are easily get reduced and also enhanced the effectiveness of company supply
chain. With help of reducing customer duty the all over flow of UK economy are
easily maintained between company, customer and government. The other advantage
of this type of initiative is that the daily requirements of customers and big firms are
easily fulfilled in time.
 Increment of universal credit – The universal credit is basically defined as the
monthly payment procedure which is initiated by the government for improving
economy of UK. This payment is facilitated to individual or enterprise as per their
current situation or status (Gonzales and Jackson, 2020). Due to receiving effective
universal credit various companies in UK are able to improve their infrastructure
strongly and also able to develop best quality products to customers for long time.
Due to receiving high quality goods and services the life style of customers is totally
changed. With help of facilitating effective universal credit the security of employees
in their job are highly increased. The major benefit of increment in universal credit by
employees is that allowances and other financial benefits are provided to employees
globally. Due to this the positive relationship between company and employees are
easily sustained. In this way the economic growth of various companies are easily
sustained for long time. With help of this facility individual easily get the income
support whether in individual is doing job or business. Due to facilitating universal
credit on monthly basis the basic requirements of every individual are fulfilled in
time.
 Introducing small business support schemes – In aspect of introducing small
business support schemes, it is the major and beneficial step which is taken by UK
government. Some examples which are comes under the category of schemes are
business loan, job plans and other. Due to initiating this type of schemes the all over
economy of UK are highly improved within low time. In aspect of job plans the
government introduced large number of vacancies on the behalf of organization. With

help of organizing vacancies potential and qualified candidate are easily attracted in
large number which leads to increase company growth effectively. In aspect of
providing business loan, it is highly essential for small and medium enterprises for
sustaining their reputation in market effectively in difficult situations also. With help
of providing various business loans organizations is able to reduce the economic risk
in their business activities at higher rate. With help of business support schemes, the
all over cashflow of company are easily managed for long time. The small grants are
programmes which is provided by the government of UK to assist the small business
owner funds various requirements from training and hiring staff carrying research and
development and other to those areas which is targeted where the cash come from and
in order to creating jobs, eventually strogest economy for years to come. Due to
introducing small business support schemes big entities are able to maintain the
demand and supply of goods in market effectively (Ježovita, Tušek and Žager, 2018).
The program of start loans facilitates to young generations for starting a new and own
business. The scheme facilitates loans and assist to those people whose age is
between 18-30 who are not able to access traditional forms of finance for a lack of
track record or assets. When organizations adapt these types of schemes effectively
then company did need to make huge amount of investment in their business
activities. For adapting various government schemes different types terms and
conditions are there which is need to follow by organization.
2.4 Major Responses of the Bank of England and Their Implications
to the UK’s Economy
The factors which are considered by the Bank of England for improving the overall economy
of UK are described below -
 Increase interest rates – During the time of difficult situation the bank of England
charged competitive interest rate in their services which leads to sustain the economy
of UK. Due to keeping competitive interest rate various impact are produced in UK
economy (What is Talent Management and Why is It Important? 2020). Firstly, the
bank of England has voted to raise interest rates by 0.5 percent points to 1.75% as the
UK battles to prevent inflation running out of control. The banking body UK finance
says about 21% of households are on a variable rate. The committee of Bank of
England monitory policy voted 8-1 on Thursday for a half percentage point rise in its
key interest rate to 1.75 percent. Secondly, impact which is occurred due to the

increase of interest rates by the Bank of England is higher borrowing cost. The higher
borrowing cost includes buying the house and others. The higher borrowing cost
eventually slow borrowing and thus economic functions. This usually show inflation
which is the main motive of bank of England in raising rate of interest. Those who
borrowed they faced higher cost but those with fixed rates on long term loans.
Thirdly, currency trade and values, that means that higher rate of interest may affect
the values of currency on economic level. Due to impact on currency rates sometimes
performance of organization are not sustained in efficient manner. Fourthly, the
change in interest rates have direct impact on the market. The bank of England often
changed their targeted interest rates in response to economic function enhancing rates
when economy is highly strong. Along with this the understanding of relationship
between stock market and interest rate will assist investors to in which way changes
effect their investments. (What does the Bank of England interest rate rise mean for
you? 2022). Due to high interest rate the economy of UK are highly effected as a
whole, the stock and inflation, recession and bond market.
 Sustenance of government bonds – A bond or government bond is basically defined
as the obligation of debt which is issued by the bank or national government. Due to
the effective use of bonds various organizations is able to run their functions
smoothly. Because the major benefit of this bond is that here company have the
option for borrow the money in huge amount and this beneficial for long term. The
Bank of England is invested the Sterling bond portfolio in best quality sterling assets.
The Bank's Free Capital and Reserves are invested in gilts and certain highly rated
supranational bonds. The Sterling Bond Portfolio is one kind of investment portfolio.
The income which is earned in the investment of sterling bond portfoilio is utilized to
pay for the price of the Bank of England’s financial stability and monetary policy
activities, and also to grow the capital base of this bank. The Sterling Bond Portfolio
is funded by Cash Ratio Deposits and the Bank of England’s Free Capital and
Reserves. The another and main feature of this type of bond is that her big entities
have the option for borrowing the money in large amount for enhancing innovation in
their goods and services. Due to conducting innovation as per the needs and desires of
customers the economic growth of companies is highly increased within low time.

3. Conclusion
After the analysis of above data, it concludes that the effective analysis of business
environment factors or forces plays the crucial role for improving the economy of UK at
higher rate. During the time of COVID and war in Ukraine the functions of every type of
business are get slow down. Due to this unemployment are highly increased and reputation of
various companies are collapsed within short duration. For solving this issue government of
UK implements various types of schemes for all types of businesses. Due to initiating various
schemes the overall portfolio of all kinds of business are easily increased in market. The
report will cover the details explanation of effect of COVID 19 on the UK economy. It
further covers the economic impact of the war in Ukraine on the UK, major recommended
economic responses of UK government and their implications.

4. Recommendations
There are various kinds of challenges which is faced by government for applying above
mentioned factors regarding improving the economy of UK country. In aspect of enhancing
the opportunities of employment government needs to identify that in which areas and
department talented employees are required. Then according to that vacancies are released in
large scale of those companies who are connected with the government. In today’s time
talented and skilled employees are required by every organization for sustaining their
performance at higher rate in any difficult situations. In aspect of implementing the scheme
of supporting small and medium enterprises it is also a challenging task for the government
of UK. Those challenges are lack of funds, use of advanced equipment’s, and other but out of
these providing funds to small and big businesses are the challenging task. Because for
government funds are very important in aspect of keeping balance in the economy of UK and
also for keeping smooth flow of cash in activities of government. The next challenge which is
faced by organization is public spending. In public spending the main motive of government
is to enhance the value of company also carry the welfare activities for public.

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