How is the UK economy facing both Brexit and coronavirus pandemic ?
Many structural changes had to be made in all countries since the Covid-19 crisis started its massacre. Working from home and shopping online are both one of these new trends which are transforming the labor market and so far, the economy. By the time the UK is suffering from such a disruption, Brexit has somehow emphasized this crisis. How is the UK's economy dealing with those issues?
What about the current economic situation ?
Data have revealed a significant decline in the UK's economy since the pandemic happened. This decline is said to be twice lower than the ones of other countries in the 2020 quarter two. Even if the next quarter its economic level has grown, it appeared clearly that the UK got to struggle with the pandemic. Its economic growth continues to slow down.
Unfortunately, the lockdown extension is not in favor of quick crisis management. The workforce is at its lowest level, counting with an increasing unemployment rate. Given the trading relationship with the EU, things are not getting better. OECD shows that the UK will know a loss of 3.5 percent. But there is still a chance that the country finds a way out, because of its regulatory regime for services.
Overview of some specific Covid-19 and Brexit impacts
Brexit and Covid-19 affect differently the sectors. Evidence shows the more they are affected by Brexit, the less they are by Covid-19. The manufacturing sector is a perfect example. But it’s essential to know that, within the sector, some have been affected by both. So have it been with the automotive industry which has felt down to 99.7 percent in April 2020. One of its immediate effects has been to decrease the employment rate in the sector.
Given free trade agreements with the EU are getting some issues due to Brexit, the Institute for Financial Studies (IFS) shows that it will cost +9 per cent more in trade. The most impacted sectors like food, transport, retail, etc., are facing a productivity decline. By the same time, cost of living is increasing, doing the same with disparities.