Question

How Has Covid-19 Effected the Economy In The UK?

1000 WORDS

• Introduction
• Literature Review
• Methodology
•  

Answer

The onset of Covid-19 in the U.K. and the rest of the world has led to the collapse of several economies; however, research indicates that the U.K., in particular, suffered a lot due to the pandemic. According to the national statistics office, the United Kingdom faced economic challenges due to the pandemic (Beckett, 2021). First, the pandemic led to the closure of several regional production industries, which led to a significant drop in the nation's Gross domestic product (GDP). The covid-19 pandemic also led to a rise in inflation rates in the United Kingdom to unimaginable levels. According to scholars, such inflation levels in the U.K. were only experienced in 1948, after the 2^nd world war. Similarly, the Covid -19 pandemic also led to layoffs of several employees, thus depriving the nations of some revenue from human resources.

Literature Review

The covid-19 pandemic has negatively impacted the U.K. economy, as the nation has recorded the worst inflation rate in its history. Research shows that inflation in the United Kingdom has risen from 0.5% in August 2020 to an all-time high of 7.8% by April 2022. The paper will now look into the impact of Covid-19 on the U.K.'s economy.

Fall of the Gross Domestic Product

The covid-19 pandemic is one of the deadliest calamities that has struck the United Kingdom. Most individuals only compare it to the 2^nd world war, which also led to the economic turmoil that led to the closure and increased layoffs of employees. According to the article "Catastrophic impact of Covid-19 on the global stock markets and economic activities" by Chowdhury et al., 2022, the covid-19 pandemic has been found to have a huge negative on the U.K. economy. Chowdhury et al., 2022, indicate that the pandemic led to a great fall in the U.K.'s GDP. As per the authors, the U.K. economy experienced a drop of about 3.1% in GDP from 20220 to 2021. Reports note that an increase in layoffs and the closure of companies in the United Kingdom have led to a decrease in the nation's GDP (Chowdhury et al., 2022). Research indicates that the production industry in the United Kingdom plays a vital role in the nation's GDP, as it contributes about 50% to the nation. A failure in the production industry in the U.K. would subsequently lead to a decline in revenue and GDP.

Rise in Inflation

According to the article "From a Recession to the Covid-19 pandemic: Inflation -Unemployment Comparison between the U.K. and India," it is evident that the U.K. has faced huge inflation during the Covid-19 pandemic. According to Victor et al. (2021), the effects of the covid-19 pandemic are starting to be felt today in the United Kingdom. For instance, the high recession in the U.K. has led to the rise of the U.S. dollar against the pound, thus indicating the rise of inflation in the region (Victor et al., 2021). Similarly, the cost of living has skyrocketed in the U.K., thus making the nation take measures to combat the rising inflation in the region.

Closure of Small and Medium-Size Enterprises  

The covid-19 pandemic has proved to be a huge problem for the United Kingdom, as small and medium-sized enterprises that play a huge role in nation-building were all closed. According to the article "How the Covid-19 pandemic crisis is affecting U.K. small and medium-sized enterprises" by Albonico et al. (2020), it is evident that the pandemic led to a decline in revenue in small enterprises and their closure in extreme cases. Albonico et al., 2020 note that the cost layoffs of workers made them have reduced sales as individuals no longer had disposal incomes to spend at their enterprises, thus leading to a reduction in their revenue and the closure of some enterprises as they continued to sink into debt (Albonico et al., 2022).

Methodology

To measure the impact of Covid-19 in the U.K., a team of researchers has to crisscross the nation in a bid to collect sufficient data that would prove the effectiveness of Covid-19 on the U.K. economy. First, the team of researchers would conduct interviews with the managers and CEOs of small and medium enterprises in the U.K., thus helping to find the source of their woes (Byrd, 2020). Again, the researchers should also conduct surveys with each firm's employees, thus helping to find out why the pandemic caused huge troubles in the U.K.

Additionally, an observation of the stock market would also reveal great data on the effect of the pandemic on the U.K. economy. For instance, stocks have fallen since 2020, hitting an all-time low in 2022. Most investors are considering withdrawing their shares as the companies are not competitive anymore.  

Furthermore, the researchers can obtain the data they need through computer simulations. The simulations can now be used to set the covid-19 draws and see how it would affect the once vibrant U.K. economy.

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