Analyse the Macroeconomic Impact of the COVID-19 Pandemic for the UK

This report provides a detailed analysis of the macroeconomic impacts of the COVID-19 pandemic on the United Kingdom. It begins by examining the economic conditions before the pandemic, including GDP per capita, inflation, unemployment rates, and consumer price indexes, highlighting the pre-existing economic challenges like Brexit. The main body delves into the specific impacts of COVID-19, discussing the government's initial response, the spread of the virus, and the resulting economic shocks. It uses the AD/AS model to illustrate these impacts, focusing on declines in fuel prices, GDP contraction, and rising unemployment. The report then explores the policy responses, including fiscal and monetary measures taken by the UK government to mitigate the crisis. It also discusses the limitations of these policies, such as liquidity traps and difficulties in controlling multiple economic objectives with a single tool. Finally, the report concludes by summarizing the key findings and implications of the pandemic on the UK's macroeconomic landscape, referencing various sources to support its claims.

Analyse the macroeconomic
impact of the COVID-19
pandemic for uk

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................1

INTRODUCTION
COVID pandemic has highly impacted different part of the world. United Kingdom was
one of the progressive country before the pandemic and able to grow after BREXIT. Coronavirus
infected large number of people in the country and break the bone of nation's economy. Report
Highlight impact of pandemic on macroeconomic of the Britain and it also describes the way in
which it deals before the spread of virus.
MAIN BODY
2. Economic before the pandemic
United Kingdom was highly affected by economic after the COVID and before the
pandemic country has different macroeconomic as compare to present situation. There are
various other reason for economic crisis in the country such new tariff implemented by various
country which increase price of raw material.
GDP per Capita:
In the beginning economic of the country was contracting by 2.5% from January to
march or before the lock down started. However, BREXIT is another reason that affected growth
of the country.
Inflation:
Inflation rate of the country was measure 1.8% before coronavirus heated the country and
affected on lifestyle of citizens (Altig and et.al.,2020). Britain exits from Europe has highly
effected growth of the nation and most of the raw material prices hike which ultimately effect on
cost of commodities.
Unemployment rate:
In January 2019 unemployment rate in the country was 3.9 percentage. However, this rate
is due to Britain's policy and procedure for Separate United Kingdom. It is also that large number
of tourist restricted themselves because of separate country from European Union.
Consume Price Index
Consumer Price indexes of the country is measured as 1.4% in December 2019. Brexit
has effected prices of cost of living but still it was not good as it before the BREXIT plan of the
parliament.

3. Impact of the COVID-19 Shocks
In the beginning of pandemic country has not taken measure to stop spread of the virus.
Government of the country was very much busy in reshuffles and BREXIT and unable to
understand coming deadly disease. Many of people try to raise question on government measure
against COVID but they said, this is limited to china and it cannot cause the country. However,
World Health organization and china was equally responsible for not informing and provide
correct data guidelines to stop the spreading capacity of the pandemic. United Kingdom is one of
technological advance country with the best health cares facility; but because of wrong
prediction and taking things lightly by the government becomes one of the reason for death of
large number of people and also it shocks the country economy. However, Britain was already
facing challenges from its exit from European UNION. Most of the country when shutting down
borders , country was welcoming international students and tourist from the world which become
one of the reason for spreading of the virus (Nicola and et.al., 2020). Many senior doctor warns
that this pandemic become a great threat to world and also give various suggestion such as
sanitization of places with hand wash can help in overcoming from these challenges. Social
distancing concept was not followed by the country in initial stage which again hampered in
prevention of the disease. There are large number of people coming from Italy which was highly
effected from COVID after china but government did not take any steps forward to tackle it.
Improvement in Health facility such as increase in number of beds, medicines related to
immunity, oxygen cylinders, etc. was not done by the government. Government also did not stop
public gathering for personal benefits which become one of the reason for spreading
Coronavirus. Cafe restaurant and other public places are highly populated which was again
overlooked by local authority and hence this all mistakes welcome deadly virus in the country.
Country intelligence again fail to understand the situation of COVID in china and if they
evaluated before then situation of the country will be totally different.
AD/AS model
It helps to understand different economic factors in one graph and anyone can analyse it
easily with the help of it.
Aggregate Demand: It can define as total demand of products and services by all customers in
the country. It can also be said that total amount of money exchange for accommodates.

Aggregate Supply: It can be referred as produce goods and service supply within a particular
period.
 It helps bring all economic factor of the country in one diagram and hence one can easily
understand ways various factors affect country's growth. COVID has highly impacted
growth of the country. Fuel Prices of the country decline as well as various company
reduce price of products.
 Long term economic growth rate not appear in the diagrams and hence unable to
understand the way in which it effects country's growth for example in the beginning of
COVID country's GDP was contracting by .2% percentage\ but after more than 30%
contraction of the economy is observed.
 Unemployment rate in the country is rises to 20.8% because of large number of people
unemployed and price of necessary products increases.

 Rate of unemployment cannot be measure from the diagram but changes in demand and
supply of product can help in analysing it.
 August 2020 inflation rate of the country falls to .2% from 1% and it is because of
increasing price of clothes, games etc.
4. The Policy Responses.
Regulators and the other public authorities have announce significant initiatives and have
provided important rules and clarification for responding to pandemic. The crisis are having
significant impact over almost all the sectors of economy.
The UK government has taken several fiscal measures related to the pandemic. On 15th April
Premier have announced various measures such as unemployment assistance and the direct
financial support. It has waived several duties and the taxes on the essential foods and the
hygienic items import. It has also provided funds for granting to small low interest loans and
have waived the penalties and interest on debt obligations and the payment for social securities.
Government of UK announced emergence funds of US$1.5 million for funding the response to
Covid 19 (Tubadji, Webber and Boy, 2020). Government has removed all the regulations that
restricted the gathering and movements from April 29.
In March Government announces measures such as health spendings, reduction in the electricity
cost and fuel cost by around 20% to fishermen, one year of incentives for the home renovations
and the constructions, it suspended the tariffs in the import of food products and new tax
measures were announced in the budgets for 2020. The reduction of electricity costs have been
extended to month of October 2020.
Outbreak of the pandemic has resulted in the health crisis and drop in the economic activities
which are without the precedent in the history. Mitigating and containing spreads of virus rightly
been first priority of the public authorities for reducing incidence of disease limiting the pressure
in the healthcare systems and for stronger rebound as the mitigation measures for relaxing the
people. The economic measures of the government has helped the organisations and people to
manage the crisis very effectively
As regards the monetary policies' government has waived the interests charges relating to the
lock-down period. This will reduce the instalments for the period. The policies will enable the
people and organization will reduce the impact of crisis.
Limitation of fiscal and Monetary policy

United Kingdom faces various difficulties because of Monetary and fiscal policy that it
has implemented.
 Liquidity trap: Interest rate of different bank is cut by the government policy to increase
economic activity of the country However, cannot become effective because of great
effect of pandemic.
 Difficult to control many objectives with one tool: After the pandemic prices of
commodity increases and government monitory policy changes cannot become effective
in it.
 Changes in interest effect exchange rate which impact on exports of goods and services
out of the country.
 It also affects homeowners to pay back their loans because of COVID pandemic affect.
 The change in rates any the banks can cause a lot in the economy of the country and it
takes around 18 months in result
There are multiple effect of monetary and fiscal policy of the country. Large number of citizens
in the country are facing recession. Different sector export stopped because of this policy and
large number of company about to close because of poor monetary policy. Government of
England try to increase economy of the country and provides various policy associated with it
but contrary long effect of pandemic unable to implement in it and decrease market share of the
industry. There are many changes needed for uplifting economy such as monetary. It require the
currect size and nature of the fiscal policy. It is important to have a proper fiscal policy nature
and size to work. It cause the national reduction in the income of national.
CONCLUSION
References
Books and journals
Altig, D. and et.al.,2020. Economic uncertainty before and during the COVID-19
pandemic. Journal of Public Economics, p.104274.

Nicola, M. and et.al., 2020. The socio-economic implications of the coronavirus pandemic
(COVID-19): A review. International journal of surgery (London, England), 78, p.185.
Tubadji, A., Webber, D.J. and Boy, F.A., 2020. Cultural and economic discrimination by the
great leveller: the COVID-19 pandemic in the UK. Covid Economics: Vetted and Real-
Time Papers, 13, pp.51-70.
Online
Post coronavirus GDP growth forecast in the United Kingdom 2020-2021. D. Clark, 2020
Available through <https://www.statista.com/statistics/1107834/uk-gdp-growth-forecast/>
UK inflation falls from six-month high, coronavirus to trigger slide. David Milliken, 2020
Available through <https://uk.reuters.com/article/uk-britain-inflation-idUKKBN21C0T8>

REFERENCES
[Online]. Available through: <>
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