UK Economy During COVID-19: Government and Bank of England Responses

This report examines the impact of the COVID-19 pandemic on the UK economy, detailing the significant decline in GDP and the challenges faced by various business sectors. It analyzes the major economic responses undertaken by the UK government, including schemes like Bounce Bank Loans (BBLS), Eat Out to Help Out, Job Retention Scheme, and Kickstart Scheme, highlighting their implications for businesses and individuals. Furthermore, the report discusses the responses of the Bank of England, such as lowering interest rates and implementing policies to support financial markets, and assesses their overall impact on the UK's economic stability during the crisis. The study shows how these measures aimed to mitigate the economic fallout and support employment and financial stability during unprecedented times. Desklib offers similar solved assignments for students.

Contemporary Business
Environment

TABLE OF CONTENTS
1.0 INTRODUCTION.....................................................................................................................3
2.0 Discussion and analysis.............................................................................................................3
2.1 Impact of Covid-19 on the UK’s economy............................................................................3
2.2 Major Economic Responses of the UK’s Government and their Implications.....................4
2.3 Major Responses of the Bank of England and Their Implications to the UK’s Economy....6
3.0 CONCLUSION......................................................................................................................7
REFERENCES................................................................................................................................8

1.0 INTRODUCTION
The contemporary business environment means a period of time at the moment where the
business owner can be able to have the better understanding of the business environment which
has a wider competition in the market and can fulfil the gaps of requirements in specific manner.
Today, each and every business is impacted by the recent pandemic covid19 which has made a
major change in the economic structure of the different countries. The report will illustrate the
research on the impact of the covid19 on the United Kingdom economy and the policies which
are undertaken by the UK government and central bank as well (Khunti, K., Singh, A.K., and
et.al., 2020). It also includes the threat of the pandemic which the country has be to obtained in
regards of economy.
2.0 Discussion and analysis
2.1 Impact of Covid-19 on the UK’s economy
The covid19 has made a great impact on the many organization, business, and countries
which has directly impacted the GDP and the economic structure of the countries. Meanwhile,
the UK also has impacted by the covid19 pandemic where they have to face many issues. In the
research it has been evaluated that a large decline in GDP of UK has taken the place where the
9.7% of the decrease has been captured in 2020. During the first lockdown which was happened
at the year 2020 the UK GDP was 25% lower in April tan the month of February. Due to the
rapid increase of the covid19 cases many large and small business occupation has been shut
down and trade companies were restricted which made the GDP and economical structure to
drop down in particular manner.
At the end of the 2021, the economic structure of the UK country has made a rise and able
to increase their GDP which makes them to earn the profits and can make the economy stable. In
October month, the 6.5% has increases and it has been forecasted that in 2022 the GDP of UK
will have the 6.0% rise (Davies, 2021). The UK’s different business occupation including retail
industries, manufacturing, construction and property, transport, trade, hospitality and such more
all the business were not able to obtain the profit and stability in this circumstances. Even in
these conditions many people faced the risk of unemployment which made the economic
structure to obtain the heavy loses and disadvantages. The people has suffered a lot in the
pandemic period and faced many issues regard to the economy situation of the families.

Economy is very essential for and individual for the survival of them. The many of the
organization of different sectors has collapsed their business occupation and not able to run their
profitability in fruitful manner (Mosser, 2020). This include the low cash flow management of
the company, losing control on the finance structure, and even the bad leadership and accounts
management which makes the company to lose their revenues and outcome. The cash flow
management has to be maintained by the management for the sudden changes which also
includes the environmental factor like covid19 pandemic (McDonald, H.I., Tessier, and et.al.,
2020). In addition, the pandemic has increases the national debt among other which means
modification in the tax revenues which made the instability in the budget procedure of an
individual.
2.2 Major Economic Responses of the UK’s Government and their Implications
In the covid19 period there are different kinds of measures and responses the UK
government has took to secure and protect the human being life. The rapid increase of the cases
in 2020 made the government to put the restrictions on the public places which includes the
shopping malls, groceries stores, different sector organization, trade and much more. The
government has announced the lockdown period in the country which has made a great impact
on the economy of the country. This action was required to be implemented essentially to save
the life of the individual (Chronopoulos, Lukas and et.al., 2020). With the restrictions and
lockdown period made the major changes in the economy structure of the UK country and made
many different implications.
With the increase of cases has been taken the numerous number of deaths and risk was
rising and making the changes in the GDP and economical values of the country. To help the
citizen and public of the UK the government has provided the different factors responds to major
changes in the economical values. Looking at the first responses, the government has provided
the scheme of “Bounce Bank Loans (BBLS)” which enable the small business people to access
and get the finance quickly for the corona virus outbreak (Lea, 2021). This scheme was for
mainly small and medium size business occupation who can borrow the money between £2,000
and turnover up to 25%. The maximum amount of the loan can be approximately £50,000. The
legal authorities and government has announced that for the first 12 months of the loan there
won’t be any fees or interest an individual have to pay but after a year they have pay the interest
rates of 2.5% per year. The scheme’s application form was submitted till the 31st March 2021.

There are some terms and conditions for taking the Bounce bank loans which includes the
eligibility criteria (Hall, Scott and et.al., 2020).
According to this eligibility factor the business should be located in the UK for
compulsory and the business occupation who was established before the March of 2020. The
individual person who takes the loan can repay the amount before the limited time period which
was of 6 years long but if someone really needs to extend the time they can contact and
communicate with their banks for the extension to 10 years by following their terms. The second
factor involves the “Eat out to help out scheme” which means the UK government has
provided the offer where the individual can get 50% off on the cost of the food and non-alcoholic
beverages (Aikman, Haldane and et.al., 2019). These discounts and offers were only applicable
for the Monday to Wednesday from the 3rd Aug to 31st August 2020. The maximum discount cost
per individual is £10.
The offer and scheme does not have any minimum spend per day they can utilize it many
times as per their needs. These schemes can also work at restaurants, cafes, bars and pubs even at
school canteens and food halls. The lockdown has made a great impact on the economic structure
where this scheme helped an individual person to obtain the profits and stability for the survival
from the food and beverages. This scheme helps the business occupations to overcome the issues
because of the covid19 pandemic and can be able to increase the outcome. The citizens of the
country UK have taken the much benefits from this scheme and also increases the number of
visitors in the food halls, and restaurants by 0.23% in August 2020 (Ozili, 2020). As, the
consumer rates increases it also enable the employment rates of the UK hospitality industry and
provided numerous vacancies to the people and can be able to earn the economy accordingly.
Looking at third factor it demonstrates the “Job retention scheme” by the UK
government due to the impact of covid19 pandemic. In this scheme the government has provided
and granted the employers for retaining and continuing the pay staff during coronavirus
pandemic lockdowns where the 80% of employee are furloughing by their wages. This offer was
established from the March 1st to September 30th of year 2021. The maximum number of
employee approximately 11.7% million who were furloughed via this scheme at a cost of £70
billion. Through this end of the scheme 4% of jobs were eligible and 21% of the employers had
one member of the staff on the process of furlough (Ashraf, 2020). Along with this, there was an

increase and rise of the 258,000 employees who were pay rolled in the month of November
compared to the October.
These schemes can be obtained and adopted by the small, medium and any kind of
industrial sector and no restrictions on size. In addition, the government expects that the
employer and management of the organization should provide the funding to the employee
properly and not furloughed them (Slepov, Kоsov and et.al., 2019). It is applicable for the small
business companies if they are keeping the employee furloughed in the corona virus pandemic
and but for essential terms. At last, the “Kick start scheme” has been implemented by the UK
government where they provide the funding to the organization or employers who creates and
gives the opportunity to the young age people between the age of 16 to 24 who are at the risk of
unemployment from the long term duration.
From this scheme in the month of November 2021 the 100,000 young people gets the
opportunity for doing a job and 217,000 job placements has been approved by the government
and make the availability. This offer of the government is to expand the plan for the jobs and
able to apply for funding until the December 2021 and these jobs needs to be started by March
2022 (Hussain, Salia, and et.al., 2018). This system helps the young people to provide the
placements and create new job vacancies will also increase the staff management and economy
in the covid19 circumstances and enable the growth of the economy and GDP of the country UK.
2.3 Major Responses of the Bank of England and Their Implications to the UK’s Economy
The Bank of England (BOE) has announced and implemented the various policies which
measures the UK to help the country financial markets and the effects of the corona virus
pandemic. These major changes and modification of the BOE has to be done to save and support
the financial growth of the country where they also include the support by employee wages
paying up 80% and can be able to serve and pay the tax by the time period. There are majorly
two factors which made the BOE to respond widely and take the implications to the UK
economy system (Auer, Cornelli and Frost, 2020).
The bank has announced to pay the interest rates at lower costs where the bank ensures the
low interest rates were available for the individual to stay accordingly. The rates were cuts from
0.75% to 0.25% on the 11th March 2020 and 0.1% on 19th March. The covid19 pandemic has hit
the cash flow management as the crises mad the business occupation forced to shut down cause

of virus outbreak. The Federal government has arranged the meeting due to this issue and made
the decision in declining of the interest rates so that an individual can be able to pay the taxes
accordingly. Along with this, the government of the UK also reduces the service charges to the
banks to help the people in definite order (Weiss, Schwarzenberg, and et.al., 2020).
The government announced and decreases the bank rates by 50 basis points to 0.25%. They
implemented the new schemes and policies measures for the SME business types and maintains
the stocks of the sterling non- financial investment grades. The reduction in the services of the
bank rates will support and help the business and public to stay confident at a period of time and
also can maintain the cash flow management of the households and occupation which will
enhance the availability of the finance structure (Hofman, and Aalbers, 2019). To support the
abilities and system of the bank to supply the amount the FPC which is financial policy
committee has made their efforts and decision in making the UK country cyclical capital rate to
0% of bank exposures. After this the rates of the capital buffers to 1% and reach 2% by the
December 2020.
3.0 CONCLUSION
In this report, it has been concluded that contemporary business environment is the
important factor to be maintained and implement the various factors. It includes the impact of the
covid19 pandemic on the global environment and makes the organizational and individual to
suffer a lot issues. Regard to this, the report has mentioned and discussed about the covid19
effects on the UK country economical structure and the measures which the government of the
UK has announced and implemented to secure and protect the economy of the country.

REFERENCES
Books and Journals
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pandemic: International evidence from financial markets. Journal of behavioral and
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