At these unpredictable times, every country in the world has faced a negative impact on its economy. The UK’s economy, which is one of the largest economies in the world, has been struggling after the appearance of Covid-19. Since March 2020, almost every business has stopped its activity and this reflected on the whole economy. The UK government has supported the companies and helped them survived, but certainly, the impacts of the pandemic could not be neglected.
Although the lockdown in the UK officially started in the last week of March, there is a contraction on GDP. In the first-quarter GDP of the UK decreased sharply since the economic crises in 2008. This came to place because before the official lockdown the majority of the businesses stopped working unforced. The prognosis for the second quarter (Q2) expresses a higher decrease because of the full lockdown and all businesses were affected except some who were able to operate because of their company activity.
The value of imports and exports is characterised to be half of the UK GDP. Over the past few years trade has expanded and became a crucial point to the UK’s economy. The latest data about the trade of the UK shows that there is a significant drop. The fall came after travel restrictions, borders were closed and businesses have been temporarily closed. The data from the Office for National Statistics (ONS) reveals that Heathrow’s traffic for April decreased with 97% with a comparison of the last year. Air cargos have experienced a fall with 62%. Not only the shipping and flights have reduced but the fishing industry has experienced difficulties as well. The Global Fish Watch released data that shows that global fishing activity declined with 10% compared to the last year.
The levels of unemployment increased as a lot of people lost their job due to the Covid-19 pandemic. Some of them have been furloughed temporarily and unaware when they will start to work again, others have been terminated. The economists predict that the number of terminated staff will increase because of the changes in the Job Retention scheme. So far, the government provides 80% of the salary and the employer is not required to pay anything. From August the employer has to participate in the contributions and the percentage of these will increase every month, which means that companies who cannot afford to pay need to lay off their staff.
The financial wellbeing of people
Even though there are financial schemes for helping people and businesses, the financial wellbeing of people dropped down. According to the ONS, the level of average household spending is down drastically, as every household is trying to do not spend money on non-essential items and plan their budget wisely. One of the reasons for this is that there is no announcement which says when everything will be over we can go back to normal.
Certainly, the beginning of 2020 was not that we all expected, unpredictable events happened which affected the economies of every country but as far as we all know the battle with the pandemic is going to the end. Unfortunately, the consequences for the economies and followed effects of full lockdowns will be in place for the next few months.