KnowledgeBank
We know the pandemic has affected everyone in different ways. But we can look at the impact of the crisis on the UK economy as a whole.
Earlier this year, the UK Government asked millions of people to stay at home to help protect lives.
This meant millions of people were unable to work. Only those doing essential work, such as providing food or electricity, were able to continue.
It also meant people spent less on non-essential things. For example, buying clothes, eating out and transport.
The disruption caused by Covid-19 meant many businesses couldn’t operate in the usual way. Many of their employees couldn’t go to work and customers couldn’t buy their products or services.
Some businesses were able to get a loan to pay for overheads like rent so they could keep afloat. And many could sell things online.
But others had to cut costs by their employees or letting them go. They simply could not carry on running their business without an income.
As a result, many people have lost their job or part of their income. It is likely that there will be more job losses in the months to come.
And it could be difficult for those entering the job market to find work as there are fewer jobs available.
The businesses among the hardest hit include restaurants, theatres and construction companies.
The Government offered employers money to cover part of their wage bill while their staff couldn’t work (this support is known as ‘furlough’).
Between March and June 2020, around nine million people got paid 80% of their income this way.
This support will start to change in October. So employers will need to work out if they can keep on all of their workforce or not.
9 million people (out of a working population of 33 million) were on furlough between March and June 2020
One of the things we (the Bank of England) is doing is offering low-interest loans to large employers in the UK. This is to help them to pay their staff and suppliers.
As the number of coronavirus cases started to go down, the lockdown rules have been relaxed. More people are going back to work.
And some people are starting to spend money on more non-essential things like eating out, holidays and hairdressers. Or buying things like furniture that they have put off buying until now.
But getting back to the way people were spending before the crisis will take time.
And a rise in the number of people out of work will affect this. They will need to find new jobs.
This will all have an impact on how fast the economy recovers and grows. Some people think we will recover quickly in a few months (a ‘V shaped’ recovery) and others say it will take years (a ‘U shaped recovery’).
Those shapes refer to the shapes of the lines on charts that show how much the economy is growing.
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