University of Suffolk: Evaluating Economic Impact of COVID-19 on UK

This report assesses the economic impact of the COVID-19 pandemic on the UK, focusing on the government's and Bank of England's responses, as well as the implications of Brexit. It highlights the unprecedented decline in GDP during 2020 and the subsequent recovery efforts. The report analyzes ...Read More

The UKs government is
undertaking a study to
understand the economic impact
of the COVID19 and the
economic response of the
government and the central

Contents
Introduction......................................................................................................................................3
2.1: Impact of COVID 19 on UK economy...........................................................................3
2.2 major economic responses of UK government and their implications.............................4
2.3: Major responses of Bank of England and their implications to UK economy................6
2.4: Implications of BREXIT on economy of UK.................................................................8
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

Introduction
The contact of global covid-19 pandemic across economics of different sectors has been largely
disruptive. It had a impact on financial markets employment, travel industry and other different
sectors. Present report is based on analysing the different schemes that are introduced by the
administration to minimise the negative impact of covid-19 situation on present functioning
(Garnett, Doherty and Heron, 2020). There is also evaluation of the way brexit has presently
affected the functioning of country and the way it is going to impact in the upcoming future time
period. Based on this analysis for the there is evaluation of the impact post back covid-19
scenario on functioning of different sectors.
2.1: Impact of COVID 19 on UK economy
The scale of the depression that has been caused by the covid-19 pandemic is unparalleled in
modern Times. The GDP is declined by 9.8 % in 2020 that is the steepest drops inconsistent
records began in the 1948. During the first lockdown the UK GDP was 25% lower in April 2020
then it was only two months previous in the year February. Economic activity was chosen up
over the spring and summer of 2020 that reflected the opening of economy further. With time the
decline was much less than the first lockdown as consumers and business have already adapted
to the previous year. There has been recovery in spring & early summer in the year 2021 that led
to a rebound in GDP (Bholat Gharbawi and Thew, 2020). In the year July 2021 it was 2% lower
than before the pandemic. There is analysis of the main factors different sectors of economy
across different degrees. After recovery the economy reopened in the year 2021 economic
growth still appears to have slowed down in summer 2021. This was initially correlated with the
spread of delta variant and there were great number of people who were requisite to self isolate
because of the situation. Some of the factors are the destruction of global supply chains that is
leading to supply shortages of some goods (Corona virus and the impact on output in the UK
economy: December 2020).
Price in 2021 because of supply problems and is expected to continue into the year 2022. There
is a great deal of ambiguity over the economic Outlook and this is sustaining the process of
research agency of virus that is materially impacting the economy. Average forecast among
economics for GDP growth in the year 2021 is 6.8 %. Expectations and rise throughout the

spring and early summer as data has showed a sturdy recovery (How do government bonds work,
2020).
Government and Central banks have introduced policies that are intended to alleviate several of
the negative impact of the pandemic. In UK, Bank of England has announced many policies to
support business organisations. The main measures are intended to keep businesses afloat and so
that they are as possible employment (Adelekeand Gao, 2021). It includes monetary support for
workers business and wider public throughout the pandemic situation so that there can be
reduction of economic uncertainty. For the UK public finances is artificial by the economics of
coronavirus pandemic the government budget deficit has reached a peacetime record in 2020-21.
Key measures of government are required to be taken to support households and business across
different parts of the world. The pandemic impact on future deficit depends on the virus and the
way enduring harm is caused to the economy. The government that and the stock of past foreign
has invited to increase that is government that is equivalent to approximately 84 % of the GDP
that is close to 100%.
2.2 major economic responses of UK government and their implications
Eat out help out scheme
Eat out help out scheme is one of the government policy measures that was having main aim to
support business which are the opening after the covid-19 pandemic situation. The scheme was
formed as a part of chancellor summers economic update on 8 July 2020 and the main aim was
to planning for jobs. In this scheme the government has provided a 50% off on the cost of food
and other non alcoholic drinks which are eaten at participate business across UK. It is supplied
from Monday to Wednesday from 3 to 31 August and the discount is kept at maximum of 10
pounds per head. Overall 849 pounds million was claim in the scheme across 78000 110 outlets
(Markus. and Brainin, 2020). There were over 10 million individual means that were covered
and the average claim per cover was 5.24 pounds. The implication of the scheme on the economy
was that the total amount paid under the scheme helped in the process of dealing with the
situation of business reopening. This king held a lot in boosting the customer demand for eating
out on scheme days in the month of August in year 2020. However because of the pandemic
because situation got worse again in the month of September dining out dropped from mid
September because of the re-emergence of virus. There were restrictions that were imposed on

various hospitality venues but it out to help out scheme was one of the major government policy
measures to support the hospitality business organisations (Eat Out to Help Out Scheme, 2020).
Bounce back loan scheme
Bounce back loan scheme was also one of the initiatives that were introduced by government to
help various small and medium-sized business organisation that are affected by the coronavirus
crisis. The main aim of this initiative was to help small and medium-sized business organisations
with a loan of up to 50000. The scheme was closed on 31st March 2021. The major implication
of the scheme on the economy of United Kingdom was that 80% of the loans were guaranteed by
the government loans was secured through bounce back loan scheme and it came with 100%
guarantee from the government (Iacobucci,., 2020) The chancellor announce that bounces back
loan scheme offer business owners higher elasticity to repay the bounce back loan with a new
government e payment system called pay as you grow. Further announcement about pay as you
grow system was made in February 2021. Business take loan throughout bounce back were able
to expand the length of loan from a time period of 6 years to 10 years. There were interest
payments for 6 months that is option to use this up to 3 times through the loan. There was a
pause of repayment entirely for a time period of up to six months. Various business owners were
able to get full support in financial terms during the corona virus pandemic because of this
government initiative. It helps in the process of enabling various small businesses to access
finance more quickly because of the corona virus outbreak. It is a process that is very helpful in
dealing with the financial requirement and helping in the process of accessing finance more
quickly (About the scheme, 2020).
Kick-start scheme
Kick-start scheme offers funding to employees to generate jobs for age group between 16 to 24
years. The scheme provides funding to create old on universal credit that is at threat of long term
unemployment. Employees of different size can apply for funding until a time period of
December 2021 (Hodds, 2021). The scheme is very helpful in offering job opportunities and
funding for the young age group who have recently started their job. Further, it can be said that
funding is available for the required amount of support and training which is helping the young
people to get a job in a coming time. The main benefits of this scheme is that hiring of young
individuals will have people working for a time period of six months, they may bring fresh ideas,
new energies and innovation which may help business in flourishing (What is Kickstart?, 2020).

It is also very helpful in providing opportunities to unemployed people and starting a new career
in the industry by helping in the process of post pandemic economic recovery. There is guide to
employer’s prospect to find out about the ways scheme can benefit the business. The means of
scheme is provide to help people in development of transferable skills that are aimed at increase
the chances of sustained employment. There are thousands of employees across public private
and not-for-profit sectors who have already apply for this funding scheme. It is helping in the
process of individuals getting a grant of 1500 pounds to cover their setup cost and also
employability support process.
Job retention scheme
Job retention scheme is started as a government initiative to make a grant to UK employees so
that they are able to cover up to 80% of the wages of employees. It is based on covering up to
80% of the wages home they maintain to pay but who would otherwise have been laid off
because of the coronavirus crisis. The original version of the scheme was started from 1st March
2020 and it stopped on 30th June 2020 but it is now replaced by phase 2 of the scheme that is
started from 1st July 2020 and 31st October 2020. Main aim of this phase was to have flexibility
that is the principal difference among the two phases. It allowed working on part time basis with
employees so that they are able to claim a grant under the scheme for the non working hours.
Employees were also required to wear an increasing proportion of furlough cost that was started
from 1st August 2020 (Wong and et.al., 2020). All organisations who were part of these schemes
registered on real-time information system to support the main aim of the scheme was that it
applies to any such organisation that includes partnerships companies and not-for-profit
organisations CJRS. There are presently no restrictions on the way organisations are receiving
public fund and specifically to provide necessary services so that they are able to respond to the
covid-19 scenario.
2.3: Major response of Bank of England and their implications to UK economy
Reduce interest rates: Bank of England had an initiative where they responded to the
coronavirus pandemic or reducing the interest. As per the special monetary policy committee
meeting that was held on March 19, 2020 the overall interest rate was reduced. Bank rate is the
UK official interest rate and it is one of the single most important interest rates across UK. It is
acted as a reference or a base rate for all the different sorts of further financial products. Because

of the economic situation the bank of England focus on lowering down of interest rates that
meant people loans for households and business. The building societies and banks were offered
long-term funding that was close to 0.1%. The mean objective of Bank of England was that more
funding will be given to bank that may enhance the present learning process. There was
additional support which was provided to banks in the process of lending to small and medium-
sized companies. The forms often require more support in difficult economic Times which
helped business to pay their staff and suppliers (Munr and et.al.,., 2020). Main implication of this
scheme was to work closely with government so that there is support to large sector business as
well as small business to offer them cash for their corporate debts.
Sustenance of government bonds: covid-19 pandemic has lead to social and economic
descriptions across different parts of the world. For this purpose the government in different
countries are having proper financial measures to mitigate the short-term impact and deal with
the restrictions. For this purpose the various actions that government is taking to support
business and individual in this situation. Bank of England has taken many types of actions that is
helping them in ensuring that business is able to have access to lower interest loans. The main
focus is also to make sure that markets for UK Government bonds are continuing to function.
The sustenance of government bond focuses on ensures that businesses have contact to new
loans at lower cost. In this the main focus is also to certify that business is having a market where
UK Government bonds continue to function. It is done to ensure that there is lower base rate fat
through the lending to business. Bank of England also announced that new scheme offers Bank a
four-year funding at a base rate of 0.1 %. It provides banks with the cost effective source that
was insulated to deal with the adverse conditions in the bank funding markets. Banks were able
to borrow amount UP to 10% so that they are able to land to business and additional funding was
available that help in the process of increasing the landing. The economic implication of the
scheme was that it helped small and medium enterprises in getting the required Government
support. The main aim of government was to encourage building societies and banks to offer
leniency to borrower so that they are able to left some and deal with the regulatory burdens.
2.4: Implications of BREXIT on economy of UK
Impact of brexit: The choice to leave European Union followed by the referendum is going to
have wide scale implications for business across industrial spectrum. Many economics across

Oxford have finished a quantitative research study to offer the information that is be ready for
future implications on functioning.
Present impact: as per the brexit referendum it has resulted into pushing up of UK intrusion by
1.7% points in the year 2017. It leads to an annual cost of 404 pounds for the average British
household. There are various studies available in 2018 that estimated the economic cost of brexit
vote was 2% of the GDP. Analysis by various economics estimated that the uncertainty of brexit
has reduced investment by business that is around by 6% points. It is also leading to an
employment production by 1.5 % points and the numbers of studies have founded that brexit it
has induced ambiguity about the UK future trade policy. Analysis in the year 2019 have found
that British from substantially have increased off shoring to European Union after the brexit
referendum. There is some European forms have reduced new investment across UK. Overall
outcomes of bridges and area will vary depending on the type of trade settlement that UK is able
to negotiate. There are free trade agreements with European Union that is trading relationship is
determined as per WTO most favoured nation criteria. Brexit has complicated the cross-border
relationships in different sectors as there are no new administrative and regulatory burdens.
Trade agreement has established a level playing field to ensure that there is open competition
that is preventing businesses in one area from undercutting businesses in other (Our response to
coronavirus (Covid), 2020).
Future impact: As per the analysis the future impact of brexit situation is that various forecast
have been made by banks of England & other banks about what is going to happen right away
after the brexit referendum. Assume that referendum is resulting into greater uncertainty and
market and is leading to reduction of consumer confidence. As per most economics European
Union membership had a strong optimistic impact on trade
(Cullen, Gulati. and Kelly, 2020). As per the study of 2017 it is estimated that all UK regions are
methodically vulnerable to brexit as compared to other regions in country. Economic impact of
brexit has also induced reduction in immigration which is going to have likely impact on
significant negative effect on the GDP per capita. It is unclear the way changes in foreign
investment and trade are going to interact with immigration but these changes are likely to be
more significant for the economy of UK.

Conclusion
From the above made analysis it is concluded that covid-19 pandemic has led to economic
and social descriptions. The announcement of London situations across different countries is
leading to different formulation of policies so that they are able to deal with the negative impact.
Government is taking several measures to mitigate the short-term impact on the restrictions.
Whether they are working towards having accessibility to neurones at lower cost there is
introduction of Government bonds schemes to ensure that there are proper support that is
provided to large and medium-sized enterprises.

Reference
Books and journal
Garnett, P., Doherty, B. and Heron, T., 2020. Vulnerability of the United Kingdom’s food supply
chains exposed by COVID-19. Nature Food, 1(6), pp.315-318.
Bholat, D., Gharbawi, M. and Thew, O., 2020. The impact of Covid on machine learning and
data science in UK banking. Bank of England Quarterly Bulletin, p.Q4.
Adeleke, S. and Gao, C., 2021. COVID-19 and its impact on the clinical specialty training
recruitment process: lessons learned and the shape of future specialty recruitment in the
UK. Journal of the Royal Society of Medicine, 114(6), pp.323-326.
Markus, H.S. and Brainin, M., 2020. COVID-19 and stroke—A global World Stroke
Organization perspective. International journal of stroke, 15(4), pp.361-364.
Iacobucci, G., 2020. Covid-19: UK deaths are higher than previously reported, new data
suggest. BMJ: British Medical Journal (Online), 369.
Hodds, M., 2021. The early impact of the COVID-19 pandemic on mathematical competencies
on entry into a UK university. Teaching Mathematics and its Applications: An
International Journal of the IMA, 40(4), pp.254-262.
Wong and et.al., 2020. Impact of COVID-19 on loneliness, mental health, and health service
utilisation: a prospective cohort study of older adults with multimorbidity in primary
care. British Journal of General Practice, 70(700), pp.e817-e824.
Munr and et.al.,., 2020. Persistent self-reported changes in hearing and tinnitus in post-
hospitalisation COVID-19 cases. International Journal of Audiology, 59(12),
pp.889-890.
Online
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