Business Environment Analysis: Impact of Ukraine War on UK Economy

This report examines the significant impact of the Ukraine war on the UK's business environment, focusing on economic consequences and potential strategies. The introduction highlights the dynamic and competitive nature of the contemporary business environment and the need for adaptable strategies to cope with rapid changes, particularly in light of the war's effects. The main body delves into the war's influence on the UK economy, including trade disruptions, inflation, unemployment, and economic growth slowdown. It analyzes the role of the UK government and the Central Bank in mitigating these challenges, suggesting recommendations such as liberalizing trade policies, controlling inflation, and creating employment opportunities. The report also addresses the impact on global supply chains and food shortages, emphasizing the need for strategic planning and policy adjustments. The conclusion summarizes the lasting effects of the war on the UK economy and underscores the importance of business compliance with government regulations, effective policy formulation, and strategic planning to navigate the challenges and achieve economic stability.

Business Environment
Task 1

Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Contemporary Business Environment has huge competitive market which keep on
changing on the continuous basis at very fast pace (Hamilton and Webster, 2018). They are
increasingly dynamic and competitive and there are some changes in the new concepts related to
control have to be developed to cope up with change. To handle the rapid changes, companies
managers develop reliable and logical business strategies. They make strategies in order to
support control, planning and decision making to utilize management accounting technique. This
helps the manager of company in identifying the opportunities and threats. They can easily grab
the opportunity by analysing the threat in order to attain the goal and success of the organisation.
Managers of the organisation have to understand the development in the business which need to
be done and requirement in order to attain success and goal by garbing fast business response.
Russia and Ukraine war has impacted the country and Russia wants to take Donetsk,
Zaporizhzhia, Luhansk and Kherson. Due to the war, the forests ignited because of fire due to
factories and the living beings are also affected. The endangered species also suffers because of
heat and fire and long term effect could be profound.
MAIN BODY
UK economy is impacted because of the Ukraine and Russia war because UK has some
direct economic links with the Russia (Averre and Wolczuk, 2018). There is a trade between the
two countries which is relatively small to the size of economy and however Russia is not
integrated or connected in the global financial system. The income circular flow is the model
which includes major exchange in the agents of economy which are represented by flow of
products, money, services and many more.
The circular flow of income indicates how money flows in within the society which
includes the flow of money from manufacturer to the workforce in the form of salary and wages
(Kolsto, 2017). The money flows back to the business by payments of the services and goods
which they have sell and rendered. It set up a link between the manufacturer and customer and
aids in studying the issue of restoration of equilibrium and disequilibrium. Due to the Ukraine
and Russia war, the most effected country is UK.
The economy of the UK is forecast that up to next year it is going to slow down (Sun and
Zhang 2022). In February, the Ukraine war is started which have created the drastic effect on the

whole world economy. Due to the present prevailing conditions, not only the Ukraine and Russia
but the whole world is effected. The payment system and trade practices of the country
disturbed because of the war. There is a drastic impact of the war on the economy of UK, the
major factor is inflation rate. It is affected because of the war which is help between the Ukraine
and Russia.
The government of UK have to focus on the the role of the government by analysing the
inflation rates. There is a rise in the inflation rates because of the war as there is a shortage of
essential goods, product and supply of commodities (Van der Pijl, 2018). Due to the war the
most impacted area is the economic which includes the higher prices of energy like petrol, bills
of energy and many more.
The Ukraine and Russia are the key manufacturer of agriculture goods and products so
the prices and cost of the food is drastically increased (Abbassi, Kumari and Pandey, 2022).
Because of the increased and higher prices of the commodities, the power of purchasing of the
customers is decreased. The important feature which leave a major effect on the organisation
performance is unemployment.
The key concern for the UK government is unemployment in order to increase and
develop the effective approach. It is important for the UK government to establish new offer jobs
and industries in the government sector in order to decrease the unemployment in the country
(Fang and Shao, 2022). The people living in the country is going to spend less amount of money
on the procurement of product and services because of unemployment as they are not able to
spend more which directly impacts the economy of the country as well. Due to the less purchase
leads to leave the economy lacking in the service and good sale. The war of the Ukraine is also
impacting the economic growth of the country as because of that it becomes slow.
The conflicts between the two countries is driving up the prices and costs of the essential
products, the global forecast is also cut down and for UK it also downgraded its outlook
(Malyarenko and Wolff, 2019). The slow growth of the economy is resulting in making critical
outcome within the country. It is also creating the major effect on the policies of economy which
are made by the government of UK. Due to slow economic growth, there will be slower
increment in the standard of living of the individual of the country. It is going to effect and result
in increased government borrowings, less revenue of tax than expected, decrease in inflation
rates, there will be a possibility of unemployment and many more.

To the government of the UK, it is recommended that they have to focus on the economy of the
country because there is a slow growth of the economy. They have to handle the inflation rate
and provide more number of employment to the large number of people of their own country, so
that there will be no unemployment in the country (Petro, 2017). Due to the current situation
most of the people have to face unemployment which decreases the economy of the country.
There is a good import and export business of UK to Ukraine, as they export their
products to the many countries which helps them in increasing the economy of the country
(Marten, 2020). UK companies should produce the goods and services according to the needs
and wants of the people of different countries including Ukraine, so that there will be more sale
of their product and services. The government of UK should make liberal rules and regulations
regarding trade policies because Ukraine is not able to import their products due to the current
situation. This is going to increase the sale of the product and services of most of the
organisations of UK and also increases the economy of the country.
Due to war the prices of the commodity has increased and hence it is impossible for most
of the people to purchase it on that prices. So the government of UK should decrease the prices
of some essential commodity so that each and every person can purchase the product and
services and hence it also increases the sale of the goods. Government should create employment
because due to the Ukraine war most of the people working in that those two countries lost their
jobs and it is difficult for them to fulfil their needs in present situation (Khitakhunov,
Mukhamediyev and Pomfret, 2017). They should provide large number of jobs to most of the
people and it is also going to increase the economy of UK. The government should also liberal
the economic policies, so that there will be easy trading of goods and services and it is going to
help the organisations and their businesses in attaining success and more revenue.
They should focus on short term plans which are very important for the growth of the
economy of UK. The short term plans are made and developed for the particular time period in
order to attain the set goals and targets (D'Anieri, 2019). It is going to increase the sales of the
goods and products of the company which directly increases the economy of the country.
Ukraine war has impacts the economy of UK in a significant manner which led to influence
global supply chain, creating catastrophic situations in regards with food shortages all over the
globe. These situations can be enhanced by UK government through introducing varied schemes
which provides protection to people residing there in a significant manner.

The Central Bank of England which is also known as Bank of England is included in the
eighth oldest world bank and considered as the most prestigious bank of the world. In 1964, the
Central Bank of England is established to act as the bank of government in order to serve United
Kingdom people. This bank is privately owned by one of the stockholders from its foundation
and afterwards in 1946, it was nationalised by Attlee ministry. Andrew Bailey is the governor of
the bank who is completely dedicated to the upliftment of the countries economy. Due to the
present economic condition, the central bank is having pressure which is making the overload on
the workforce of the company. The UK economy is also set to attain its targeted success and goal
with respect to the given time of period to achieve effectiveness in the day to day operations
(Sutyagin and Bronk, 2017). The government plays an important role in giving support to the
Central Bank in order to develop the focused policies.
The implementation of the strategic plan is very important in order to attain and evaluate
the desired goal and best results (Bayramov, Rustaml and Abbas, 2020). The inflation based
policy and rates have raise because of the recent war which is held between the Russia and
Ukraine and hence increases the prices and cost of the important and essential commodities. The
bank should make a policy which is related to the countries inflation rate to control the issues of
price hike. It is important for the bank to introduce the essential planes and policies to control the
rates of inflation.
The policies and plans which are related to the inflation are mad by the professional
directors and members of the bank in order to control the present situation of the bank
(Shevelova and Plaskon, 2018). The country people also plays vital role in following and
supporting the developed policies which is suitable for attaining effective and proper planning
and objective. Interest rate is related to the terms at which product or money can be listed off and
in the economic policy it is also used as a tool. Interest rate aids in countries development and
are considered as a economy backbone.
It is the Central Bank responsibility to set the rate of interest to attain the objective of
monetary policy, stable inflation, price stability and many more. Central Bank has increased the
interest rate in order to focus on the circulation flow of the money in economy (Hufbauer and
Jung, 2021).

CONCLUSION
From the above mentioned information, it has been concluded that Ukraine war has
lasting effect on UK economy which led to numerous catastrophic situations. Business
environment consists of numerous forces such as political, economical, technological, social
aspects which influence business operations inadvertently. Due to Ukraine and Russia war, UK
economy has suffered a lot as unemployment rate increases in a significant manner. It is
imperative for business houses to make compliance with regulations set by government for
dealing with war times. This has led to high inflation rates, unemployment as well as interest
rates which impact the whole economy in an adverse manner. Central bank is also provided with
recommendation regarding minimizing the impact of Ukraine war on economy in significant
manner. They should formulate policies in regards with curbing the impact of war on nation's
economy. They have formulated policies for minimizing interest as well as inflation rates which
affect for better economic conditions in an effective manner. They have to formulate the
strategies in accordance with organisation's well-being in a significant manner.

REFERENCES
Books and Journals:
Abbassi, W., Kumari, V. and Pandey, D. K., 2022. What makes firms vulnerable to the Russia–
Ukraine crisis?. The Journal of Risk Finance, (ahead-of-print).
Averre, D. and Wolczuk, K. eds., 2018. The Ukraine Conflict: Security, Identity and Politics in
the Wider Europe. Routledge.
Bayramov, V., Rustamli, N. and Abbas, G., 2020. Collateral damage: The Western sanctions on
Russia and the evaluation of implications for Russia’s post-communist
neighbourhood. International Economics. 162. pp.92-109.
D'Anieri, P., 2019. Ukraine and Russia: From civilized divorce to uncivil war. Cambridge
University Press.
Fang, Y. and Shao, Z., 2022. The Russia-Ukraine conflict and volatility risk of commodity
markets. Finance Research Letters. 50. p.103264.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hufbauer, G. C. and Jung, E., 2021. Economic sanctions in the twenty-first century. In Research
Handbook on Economic Sanctions (pp. 26-43). Edward Elgar Publishing.
Khitakhunov, A., Mukhamediyev, B. and Pomfret, R., 2017. Eurasian Economic Union: present
and future perspectives. Economic Change and Restructuring. 50(1). pp.59-77.
Kolsto, P. ed., 2017. Russia before and after Crimea: Nationalism and Identity, 2010-17.
Edinburgh University Press.
Malyarenko, T. and Wolff, S., 2019. The dynamics of emerging de-Facto states: eastern Ukraine
in the post-Soviet space. Routledge.
Marten, K., 2020. NATO enlargement: evaluating its consequences in Russia. International
Politics. 57(3). pp.401-426.
Petro, N. ed., 2017. Ukraine in crisis. Taylor & Francis.
Shevelova, S. and Plaskon, S., 2018. Is the Ukrainian economy’s absorptive capacity appropriate
to attract foreign direct investment and facilitate economic growth?. International
Journal of Emerging Markets.
Sun, M. and Zhang, C., 2022. Comprehensive analysis of global stock market reactions to the
Russia-Ukraine war. Applied Economics Letters. pp.1-8.
Sutyagin, I. and Bronk, J., 2017. Russia’s New Ground Forces: Capabilities, Limitations and
Implications for International Security. Routledge.
Van der Pijl, K., 2018. Flight MH17, Ukraine and the new Cold War: Prism of disaster. In Flight
MH17, Ukraine and the new Cold War. Manchester University Press.