A Comprehensive Report: COVID-19 and Brexit's Impact on the UK Economy

This report examines the multifaceted impact of COVID-19 and Brexit on the UK economy. It explores both macroeconomic effects, such as declines in GDP, increased unemployment, and inflation, and microeconomic impacts, including the disruption of industries like tourism, automotive, and finance. The analysis highlights the significant challenges faced by the UK, including trade volume decreases and the movement of businesses to the EU. The report references various sources to support its findings, illustrating how these events have collectively weakened the UK's economic standing across various sectors. It provides a comprehensive overview of the economic consequences, making it a valuable resource for understanding the complex interplay of these significant events.

Impact of COVID-19 and Brexit on the UK
economy
Introduction
Covid 19 and Brexit both have badly affected UK’s economy. They both harmed some of the industries
collectively and a number of other industries individually. Both caused much damages to country’s
overall Gross domestic product. Multiple impacts of Covid 19 and Brexit can be seen on UK’s Economy
including big and small scale industries, unemployment rates and trade volumes.
Impact of Covid 19 on UK’s economy
Impact on macro economics
Covid 19 has caused an increase in unemployment and inflation and a decrease in growth domestic
product and growth rate. Unemployment rate has increased significantly. Business Impact of Covid-19
survey on 19th October to 1st November 2020 showed that 9% of the workforce which included over 2
million employees remained on partial or full leave (Impact of Covid-19 and Brexit for the UK economy,
2021). They further estimate that there would be an increase in unemployment rate of 1%. According to
Office for National Statistics (Coronavirus and the impact on output in the UK economy - Office for
National Statistics, 2021), UK’s growth domestic product declined to 9.9% in 2020. However due to third
Covid 19 lockdown the economy will be facing more economic contraction as the Institute of Fiscal
studies estimated that UK’s economy will be 2.1% lesser in 2021 than in 2020.
Impact on micro economics
Covid 19 has destroyed almost everything that came into contact with it ranging from restaurants,
travelling, education and sports to all private businesses. United Kingdom is no different to other
countries in respect of pains caused by Covid 19. As the crisis continue to speed up the physical markets
are almost shut down which greatly impacted the small scale businesses. Industries dealing in
accommodation, leisure, tourism and food estimated around 60% overall loss on sales (The economic
impact of coronavirus on UK businesses | VOX, CEPR Policy Portal, 2021). So as a whole Covid 19 greatly disturbed
the small scale enterprises and put a halt on their productions.
Impact of Brexit on UK economy
Impact on macro economics
Brexit has negatively impacted UK’s macro economy. The volume of trade that UK and European Union
shared was almost equal to the volume of trade UK shares with US. Brexit caused UK’s growth to fall
down from 2.4 % in 2015 to 1% in 2019 according to the statistics of Office for National Statistics (Gross
Domestic Product: q-on-q4 growth rate CVM SA % - Office for National Statistics, 2021). According to the
U.K. House of Commons Library (Harari, 2021), over 15 years Brexit will cause a downfall of 6.7% to the

Growth of UK. The Institute of Fiscal studies forsee that due the off administrative costs, disruptions of
the Brexit will be distributed and allocated unevenly. Organization for economic co-operation in its
survey the UK 2020 (Executive summary | OECD Economic Surveys: United Kingdom 2020 | OECD
iLibrary, 2021) determined that there was 6.1 % fall in exports and 7.8% fall in imports and an overall 3.5
% output loss over the medium term. However the future forecasts using gravity model showed that
GDP will not fall more than 1%, there will be less unemployment despite more inflation (GUDGIN, 2021).
So Brexit has caused much chaos in macroeconomics.
Impact on micro economics
It was believed that this step would bring forth positive changes to the overall economy of the UK but
Brexit on the other hand has slowed down the economy of the UK. A large number of individual
businesses was moved from UK to European Union due to Brexit. Brexit directly affected automotive
industry, transport equipment, chemical and chemical products, textiles services such as finance and
communications. UK and European Union had free trade agreements and traded goods, services and
public and private sector investments. According to the house of Common’s committee approximately
56% of vehicles from UK are exported to Europe. According to Society of Motor Manufacturers and
Traders there will be an annual increase in tariffs including £2.7 billion in imports and £1.8 billion in
exports (How Brexit Will Affect the Automotive Industry, 2021). One can say that microeconomics are
affected up to a great extent by Brexit.
Conclusion
Covid 19 and Brexit both proved to be much troublesome for UK’s economy. They both played their part
to minimize the economic progress and maximize the economic downfall by affecting all public and
private sectors, small and large scale businesses, sales and trade. They have affected the economic
progress nationwide and weaken the country in every aspect, combinedly.
Bibliography
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