• Subject Name : Economics

Introduction to Covid-19 Impact on The UK Economy

Coronavirus is the pandemic that is fundamentally spread and affected the health of the public due to social restrictions. This has caused an unparalleled shock to the economy of various countries and designed a way for financial support to reduce the harm to households and firms. The facilitation if recovery is harmed in the long-term for the assurance of sustainable exit over the long term. In the earlier pandemics like SARS and Ebola, data has been presented to know the real-time impact on economic activities caused due to social distancing. This was there in the country for some time of three, six, and twelve months respectively. United Kingdom bore large scale impact on the economy due to COVID-19 and is starting to become clear. The government of the country is taking effective steps and formulating policies that depend on the practical opinion of the deepness and span of the recession. The viral outbreak and real-time data have presented the three columns to present the scenario of the United Kingdom economy in the study. According to current forecasting, the economic outcomes can be easily worsened because of crucial restrictions of social distancing. This has resulted in total loss of output for the management of crisis and influence in recovery phases (Barua, 2020).

Literature Review of Covid-19 Impact on The UK Economy

As discussed in the introduction, economic insights of the country present that the government policies have been developed to review daily. Based on the scenarios it is reflected that the economic shocks are there that are more severe but they are also more proctored by the national as well as international officials. The reports that were published were IMF (2020), UK office, OECD (2020a) to take over the responsibility of budget (Fernandes, 2020).

The implications have been found for the near-term cost and long-term sustainability of the administration to know the economic policy on the response of the epidemic. The impacts of the policies have been discussed by taking into account the costs and direct effects of cost on the government of the UK.

The official data of the economy is not presented as such in the report that means the GDP data is to be followed along with the results of economic activities that fall with the consequence of social distancing measures introduced to stem the widening of coronavirus (Fetzer, Hensel & Hermle et al., 2020).

The evidence comes from the past history of pandemics. The limitations are there with the social distancing to get the responses of 1918-1920 Spanish Flu outbreaks in North America and the Spanish Flu Outbreak. Other pandemics like Ebola outbreaks were there in West Africa during 2013-16 and Hong Kong SARS outbreaks in 2003 have shown the same. The social distancing historic examples vary across and within countries based on the tightening and loosening over time. The reduction of economic activity for a year in the previous year was around 7% and falls to 20%. The widespread of economy-wide lockdowns suggested that GDP during the outbreaks exceeds than the normal (Fetzer et al., 2020).

Here, the data of the UK, Canada, and the US is presented around the Spanish Flu epidemic, Hong Kong around the SARS outbreak and Guinea, Sierra Leone, and Liberia throughout the outbreak of Ebola in 2014.

The survey conducted by the UK Office for National Statistics showed the scenario of corporate offices that in mid-April and a quarter of businesses were for the time being stopped up and approximately 40% of them experienced lower turnover. Less than 5% of the firms only reported higher turnover than normal. The other survey conducted by UK business organizations originate that around a quarter of firms has at least parts of employees.

This figure presents that the economy of the UK will remain 30% lower because of present social distancing measures.

Based on the historical and contemporary evidence, three scenarios have been seen with the alleyway of GDP in 2020 that depends on lockdown for three, six, and 12 months. In fig 3, annually the GDP is seen falling by 10% and 24% to return to optimistic enlargement in 2021(Sohrabi et al., 2020).

The Pace of The Economic Recovery

There is a long-run impact of coronavirus on the UK financial systemthat depends upon the output of the year. It will take a longer time to get recovery as the social distancing measures are lifted and the individuals are also scared of the results of social contacts. On an estimation, it will take around three years to return to a pre- epidemic level. It is seen that the growth will return to its normal stage but the output that is lost cannot be recovered. The experience of the UK's recession also suggests that downturn cannot be recovered but the increase rates will generally be depressed. In figure 4, the trend of pre-recession is seen in UK economic trend (Sohrabi et al., 2020).

From the UK and international reports' suggestions, it is unlikely to get a V-shaped recovery from the contradiction in the GDP of 2020 (Fetzer et al., 2020). The human capital has been deteriorated; the damage has been done to households and firms, loss of labor market, unemployed workers, high demand for precautionary savings, and weaker global trade are linked with deteriorating growth patterns (Adams, Boneva & Golin et al., 2020).

Methodology of Covid-19 Impact on The UK Economy

The data is collected to do any sort of analysis for research. There are two types of data like the primary and secondary data. Primary data is that which is collected by the researcher. This data has a high degree of reliability and trust. The researcher collects the data that is needed and useful for the research. On the other hand, the secondary data is that in which the data is collected either by the authorities or by some other researcher for the same or different purposes. The information collected depends upon the convenience of the interviewer and can't be said that it has a high degree of reliability. The secondary data also includes reports, publications, and articles that are followed to do the research. These are the authentic sources because the organizational bodies recruit the employees to get information for the research topic. It is a flexible approach and is not always possible that the data is collected at the time of research.

In this research, secondary data analysis would be done by taking the review of other government publications and articles to draw the inferences. It will be a systematic method of data collection. The past and present trends are known by the literature presented above and further discussion would be done based on data collected. The procedure that will be followed is the procedural steps that will be followed the evaluation will carry out in steps, the paper will be analyzed that will have the data on economic trends of the country and its impacts. The library will be of major usage here to derive the results (Nicola et al., 2020).

Further, the research methodology is the most important step that lets us know which method is followed in the whole process. Two types of research methods are there such as qualitative analysis and quantitative analysis. The quantitative analysis is the one in which the analysis is done by doing the study based on numbers. On the other hand, the qualitative data analysis is that in which non-numeric information is taken for analysis. It includes notes, video-recordings, text documents, images, and transcripts that are taken for analysis. In this research, the data that would be taken for analysis is secondary data that includes a review of documents that are relevant for the study. Majorly the reports of the year 2015-2020 will be followed for analysis (Fornaro & Wolf, 2020).

Results of Covid-19 Impact on The UK Economy

The results of the articles studied present that there is an expected fall in the rates of GDP that will last for a longer duration and impact the labor market. Around 6 million workers were having employment in the country out of which 2 million have completely lost their employment. The major affected is the private sector of the country.

From the earlier discussed three scenarios also in literature, it presents that there is cyclically in UK labor productivity. The rise of employment will relate to falling proportions of workers working daily. It is a completely neutral discussion topic and is not known that when the working force again will get employment. In the three months, the annual average employment has gradually decreased within the first month it was 4.8 million, the second month it was 7.2 million, and will further be increased based on the earlier readings and unemployment status (Kinross et al., 2020).

Based on the reports, inflation and interest rates will be flattened for the coming few years. In the long run, the fiscal effects and welfare effects have heavy costs on the outbreak. The theories also suggested that savings should be done because they save the person during hard times. The inflation rates and expectations both affect government policy and commitment too. However, during the pandemic times, the government has supported the public by protecting households and firms from economic shock. The scenario will bounce back by pushing the demand for inflation in crisis. Hence, the scenarios used atheist approach and implicit that rise will be impartial for 2021 but very low in 2020 (Mogaji, 2020).

Discussion on Covid-19 Impact on The UK Economy

 Finally, it is known that the economy of the UK has been hit and shrunk up to 35 percent in the records. It is a result of lockdown but the efforts of the government are seen honestly that they worry about people what is happening in the country. This is a tough time and there will be more to come. The economy is being hit by the country and there are almost half of the people who have lost their jobs during these pandemic times. The government of Australia feels that it will be recovering its economy faster and stronger. Three-month lockdown with partial restrictions triggered an economic decline of 35.1 per cent (Mair, 2020). The Cabinet Minister said that the economic conditions of the country revealed that there is a daily rise of 778 in the country's COVID-19 death toll. According to the National Health Service, the number of hospital admissions risen in hotspot areas of the country during the lockdown. The economy of the UK is contracted by 12.8 percent this year based on the scenario reports and is expected to get back to its pre-crisis growth trend by the end of 2020 (Lea, 2020). The important thing is that the benefits are to be maintained by continuing the instructions that have been given to prevent the virus.

Conclusion on Covid-19 Impact on The UK Economy

The interest rates and inflation rates have important implications that ultimately affect the economic costs of the outbreak. The sustainability of the government’s policy is also affected due to rates of inflation, trade-offs and interests are very low in the country. There is no support given by the government to manage the difficult trade-offs for the protection of health, support of households and firms, and providing finances to safeguard health crisis. Hence, the effective responses by the government will help to improve the economic status of the country. Based on past experiences, theories, and real-time data the picture is very clear for the upcoming five years of the UK. Social distancing restrictions have put the human capital in the complete loss by snatching employment from them. The effective measures with strictness and duration by the government will help the country for post-crisis recovery.

References for Covid-19 Impact on The UK Economy

Adams-Prassl, A., Boneva, T., Golin, M., &Rauh, C. (2020). Inequality in the impact of the coronavirus shock: New survey evidence for the UK. DOI: 10.17863/CAM.52477

Barua, S. (2020).Understanding Coronanomics: The economic implications of the coronavirus (COVID-19) pandemic. SSRN Electronic Journal. DOI: 10/ggq92n.

Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. Available at SSRN 3557504.

Fetzer, T., Hensel, L., Hermle, J., & Roth, C. (2020).Coronavirus perceptions and economic anxiety. Review of Economics and Statistics, 1-36. DOI: 10.1162/rest_a_00946

Fetzer, T., Hensel, L., Hermle, J., & Roth, C. (2020).Perceptions of coronavirus mortality and contagiousness weaken economic sentiment. Xiv preprint arXiv:2003.03848.

Fornaro, L., & Wolf, M. (2020).Covid-19 coronavirus and macroeconomic policy. Retrived from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3560337

Kinross, P., Suetens, C., Dias, J. G., Alexakis, L., Wijermans, A., Colzani, E., & Monnet, D. L. (2020).Rapidly increasing cumulative incidence of coronavirus disease (COVID-19) in the European Union/European Economic Area and the United Kingdom, 1 January to 15 March 2020. Eurosurveillance25(11), 2000285.

Lea, R. (2020). The coronavirus crisis: Recession and modest lockdown relaxation. Arbuthnot Banking Group18. Retrieved from: http://www.arbuthnotgroup.com/upload/marketmatter/documents/18_may_2020.pdf

Mair, S. (2020). How will coronavirus change the world? BBC Future31.Retrieved from: https://www.counsellingresources.co.nz/uploads/3/9/8/5/3985535/how_will_coronavirus_change_the_world.pdf

Mogaji, E. (2020). Financial vulnerability during a pandemic: Insights for coronavirus disease (COVID-19). Mogaji, E, 57-63. Retrieved from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3564702

Nicola, M., Alsafi, Z., Sohrabi, C., Kerwan, A., Al-Jabir, A., Iosifidis, C.,& Agha, R. (2020). The socio-economic implications of the coronavirus and COVID-19 pandemic: A review. International Journal of Surgery. Retrieved from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3564702

Sohrabi, C., Alsafi, Z., O’Neill, N., Khan, M., Kerwan, A., Al-Jabir, A.,& Agha, R. (2020). World Health Organization declares global emergency: A review of the 2019 novel coronavirus (COVID-19). International Journal of Surgery. DOI: 10.1016/j.ijsu.2020.02.034

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