Introduction
The United Kingdom economy is ranked the sixth-largest economy worldwide through the GDP rank, the economy is market orientated and highly developed. Moreover, the economy purchasing power in among the top ten in the world and comprises of more than 3.3 percent of the globe Gross Domestic Product. In a survey conducted in 2016 the UK was among the top ten goods exporter globally and was ranked fifth in the world in goods importation. Being one of the most globalized economy in the European region it is made up of Northern Ireland, Wales, England and Scotland. 80 percent of the
gross domestic product in UK is contributed by the service sector.
Moreover, financial services industry, British Aerospace industry and pharmaceutical industry plays a vital role in UK economy. Moreover more than 5 percent of the largest companies in the globe have their headquarters in UK. Historically, industrialization in the 18th century made the UK dominate the world economy. The agriculture sector, construction sector and production industries such as electricity, gas and water supply adds a gross value to the economy of United Kingdom. The service industry which adds the most value to the gross value includes, exports, education, health, creative industry, financial services, business, real estates, public administration
, defence, and tourism.
Corona Virus in the United Kingdom
Corona virus disease started in Wuhan China in December 2019. the WHO later declared the virus a public health emergency and later as an epidemic as the number of cases around the world continued to escalate. The virus transmission was first recorded on 28th February in the United Kingdom as the earlier cases were all imported cases from abroad (KUCHARSKI, 2020). By march 2020 corona virus cases had been recorded in Wales, England, Scotland and Northern Ireland.
Later the government unveiled the contingency and containment plans raising the level of the outbreak to a level 4 incident. On march 20 2020 major containment measures were undertaken and this affected major service industry sectors of the economy. Pubs, restaurants, leisure facilities and all schools were ordered to cease operation. Later on march 20 2020 the UK government imposed a lock down on all the public, imposing restriction on non essential travel, closing businesses, shutting places of worship, and closing venues and
facilities all over the country (KUCHARSKI, 2020).
Pre Corona Virus Epidemic Analysis
The global gross domestic growth has been weakening of United Kingdom since the middle of year 2018. the purchasing power in the economy also fall to 3 percent in 2019 from 4% in 2018. this slowed global output growth had been brought by the emerging markets and advanced economies. In 2019 the manufacturing export orders dropped to
the lowest since August 2012. however it has slightly recovered but remains low. The inflation rate in UK fall from 1.5 % in October 2019 to 1.3 in December the same year but increased by 0.5 % to 1.8 percent in January 2020. At the onset of the crisis, the UK government debt was above 80% of GDP. The government’s fiscal package composed with the slowdown of economy of UK may bring public debt to more than 100 percent of GDP (Coyle, 2014).
Moreover the GDP was highly affected by the impact of Brexit and uncertainty. Basically Brexit increased the uncertainty in various economic sectors and the nature of the Britain
relationship with its trading partners. Brexit was cited by more than 30 % of the firms in UK as the source of their uncertainty when the
| Brexit discussion started in 2016. as the time went by survey conducted showed that more than 55 % of firms cited Brexit as one of the source of their uncertainty in their business in UK. Brexit has affected the economy of UK since the increased uncertainty has also lead to some percentage firms become pessimistic about the economy. Moreover, firms in UK expects an eventual negative impact on sales due to Brexit uncertainty (Great Britain, 2016).
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Recently, three months to February 2020 the unemployment rate of the UK edged up to 4 percent. This rate was above the expected unemployment rate of 3.9 percent (Blanchflower, 2019). More than 58000 people were out of work in this period making a total of 1.36 million people out of work. However, the number of people employed increased by 172000. between October and December 2019 the unemployment rate was about 3.8 percent, this was the lowest recorded rate since early 1975 since the number of the employed increased by 2018000. However the unemployment rate rose on the months rose on January 2020 to 3.9 percent and 4 percent in the month of February 2020 (Great Britain, 2016).
Analysis During Corona Virus epidemic
Thousands of lives in the United Kingdom have been lost due to the current Corona Virus Epidemic ravaging the globe. This Epidemic is causing economic crisis to the United Kingdom and the globe at large. Millions of jobs are currently at risk in Britain since major containment measures to deal with the epidemic have been put in place. This measures have lead to major shutdown of industries, streets are empty and major pubs and restaurants have been closed. The gross domestic product will obviously fall since major sectors like tourism, service sectors like education are currently adding less value to the gross total (OECD, 2020).
Currently the debt and deficit level of the country is higher while as the unemployment rate continue to increase. However the UK government undertook several measures for the economic response due to the Corona virus epidemic. This includes, paying furloughed employees wages, deferring VAT payments, Business rates holiday for all retail, hospitality, leisure, and nursery businesses in England, supporting businesses, deferring income tax to those self employed and offering grants to help in
businesses (In Morrison, 2016).
The UK prime minister launched restrictions and containment measure on March 23rd , urging the public to stay home in order to contain virus transmission. Therefore, the economy of the country is at a halt and the unemployment rate is expected to rise since firms will consider giving workers unpaid leave. With the containment measures, there is few movement of vehicles and plains and the industrial output is reducing as the situation escalates. Due to the lowdown measure the inflation rate in UK fell in March to 1.5 percent largely brought by the reduction of clothes and fuel prices (Bordo, Orphanides, 2013). Moreover, the consumer price index reduced in March 2020 compared to CPI in February the same year. According to economists, due to the economic situation in the UK the inflation rate could drop even further to 0.5 percent (OECD, 2020).
Post Corona Virus Analysis
The government of United Kingdom will have to implement various monetary and fiscal policies to deal with the current economic situation brought by the current Corona Virus Epidemic. Its is projected that the as the year 2020 goes by the inflation rate will reduce up to 0.5 percent. The country will need various reforms in different sectors like fiscal measures reforms, labor market reforms, and financial market reforms . The government will also have to guarantee the functioning of essential sectors such as food production, distribution, regular health care and essential infrastructure (Kay, King, 2020).
References
Blanchflower, D. G. (2019). Not working: Where have all the good jobs gone?.
Bordo, M. D., & Orphanides, A. (2013). The great inflation: The rebirth of modern central banking.
Coyle, D. (2014). GDP: A brief but affectionate history.
Great Britain. (2016). HM Treasury analysis: The immediate economic impact of leaving the EU. London: Crown.
In Morrison, F. L. (2016). Fiscal Rules – Limits on Governmental Deficits and
Debt.
Kay, J. A., & King, M. A. (2020). Radical uncertainty: Decision-making beyond the numbers.
KUCHARSKI, A. D. A. M. (2020). RULES OF CONTAGION: Why things spread – and whythey stop.
OECD ( 2020, March 3). OECD Economic Outlook, Interim Report March 2020