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Business activity increases as we approach the 12th of April


Recent data from the ONS shows that the number of businesses trading in the UK as of late March is 75% of its July 2020 levels.


This is an increase from 71% which was seen in early January 2021.


The percentage of workforce Furloughed within businesses is at 19%, equating to approximately 6 million people.


This is an increase from 11% in early December, a regrettable trend as it places additional strain on the UK governments budget, thus preventing additional spending on public health measures such as the rolling out of vaccines.


However, businesses are somewhat aiding the public health efforts as 8% of businesses are providing regular coronavirus testing, 25% of these businesses workforce are receiving COVID-19 testing, thus equating to 2% of the UK labour force.


Businesses have seen an increase in paperwork when it came to exporting (38%) and importing, (45%) most likely a result of the United Kingdom leaving the European Union.


The increased paperwork likely inconveniences businesses as they will be forced to pay higher costs as workers have to spend time sifting through the monotonous work, and, delays at borders also yield increased costs.


Despite the increase in business trading to 75%, only 17% of service businesses are trading.


The service industry has been hit particularly hard by the pandemic as over half of these firms have only had cash flow reserves capable of holding out for 3 months.


However, business trading in the service industry has likely increased to some degree as we near the 12th of April.


The date will supposedly be the day which the UK government officially relaxes some of the lockdown restrictions, thus allowing certain non-essential establishments to open.


This only applies to nations in the United Kingdom that will relax restrictions, i.e. England, Wales and Northern Ireland.


Scotland will not relax its restrictions on April 12th, aiming for April 26th instead.


One of these is pubs and other service sectors, so, as we near the date, the activity of these businesses is increasing.


This is because pubs and similar services are expecting a large influx of demand from consumers as people are eager to go out and spend after saving for a long period of time.


Due to the large increase in demand, these firms, which provide price elastic products, must be prepared to accommodate the demand to serve every customer as to pocket a sizable profit once they open.


This excitement and confidence boost of consumers will lead to mass consumer spending which will drive aggregate demand upwards.


Because of this, the UK economy will likely see strong growth once non-essential stores will open, with a large boost at the start which will then trail off as excitement dies down.


However, there is some speculation around the government’s decision to open non-essential establishments due to the health risks associated with the decision.


In the past, the “Eat out to Help out” scheme has been linked towards being the primary contributor towards a break out of COVID within the nation as more individuals were not obeying social distancing.


Because of this, the government decision may have massive repercussions on public health that may undo some of the progress which the nation has made with vaccination.


This may therefore cause an extension in the lockdown which will cause the UK economy to lose the momentum it gained, thus likely leading to a negative opportunity cost as unstable growth has occurred at the expense of public health.


However, the successful rollout of the COVID-19 vaccine may prevent this worsening public health from occurring as the UK has already vaccinated 33 million individuals.


Additionally, it is claimed that the nation will coincidentally achieve herd immunity on the 12th of April once 73.4% of the population has been vaccinated.


If these claims are true, then the UK will likely achieve sustained, short-term growth due to the boost in aggregate demand attributed to the opening of the economy without compromising public health efforts.

 

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