The UK economy has just experienced its most turbulent period in living memory. However, for those running a business it is the future that must be the current focus.

There are plenty of reasons to be optimistic about the prospects for business, and now is a great time to invest in growth and take advantage of the coming economic boom.

A good barometer

A good measure of business sentiment is the stock market. For the UK, the best of these measures is the FTSE 250 – it tracks the fortunes of publicly listed companies slightly smaller than the largest 100 that form the FTSE 100. FTSE 250 companies’ sales tend to be more domestically orientated, and their fortunes more directly linked to those of the UK economy.

As we entered the pandemic, the FTSE 250 index was close to its all time high of just over 22,000. As fears of Covid-19 accelerated at the end of February 2020 the index fell dramatically, and sank to a low point near 13,000 in March 2020. Since then there has been an almost relentless climb back, and the index currently stands at just under 23,000 – it’s highest level ever.

If you draw a graph, it is close to a V shaped pattern – a very steep drop with a subsequent strong and steady rebound.

Stock markets are where people stake real money on expectations for the future earnings of the businesses they buy into. Valuations are, by their nature, both reactive to current events and expectant of future performance. The initial fall was a visceral panic – people dumping shares based on real fears around the consequences of an unknown disease spreading across the world. The climb back has been steady but determined, and helps us to predict the future.

The end of the Pandemic

The stock market has already moved beyond the end of the pandemic – seen past the short term cash burn, and is looking to the future profits that will be earned once the economy is fully open again. Share prices in the FTSE 100 are still a little deflated because of worldwide financial weakening and a strong Pound, but for well managed, healthy companies their potential to earn future profits has not been diminished.

Weaker businesses will have failed during the pandemic. Those less innovative, with lower financial reserves or previously struggling have finally been pushed over the edge. Bad news for them, but good news for the survivors as it reduces competition in the market, creating potential to increase market share. Successful business are those that look beyond today and see the opportunities just around the corner.

An appetite for innovation

The past year has provided an opportunity to reset many things, difficult decisions have been forced, there has been less resistance to change and the opportunities to adopt innovative technology and working practices have been grasped. The momentum of this is now clear, and a whole range of new initiatives promoted by the government around environment, climate change and infrastructure will help to drive business investment over the next few years. Digital currency, electric cars, bio tech and artificial intelligence are all coming of age. Changes in consumer habits have accelerated, with online business dominating the growth, especially in retail where the structural changes have been brutally clear. Amazon posted a three-fold increase in first quarter profits – which simply demonstrates the scale of the shift towards online business.

The best time to start a business

These turbulent times present a great opportunity to start a new business. Consumers are seeking innovation, new technologies are available to be monetised and there is opportunity to wrong-step established market leaders. This time, unlike recessions of the past, structural unemployment does not pay a part, incomes have been protected, and the nature of lockdown has meant that individual savings levels have increased overall. Money has been saved and people are keen to get out and spend it!

Brexit is settled

After years of indecision and uncertainty, the UK has finally left the European Union. It is this certainty that enables business leaders to plan for the future, and take advantage of the new opportunities brought about by an independence from Brussels. At this point the rights and wrongs of Brexit are irrelevant – it is the certainty that drives the optimism.

Now is the time to act

The boom in business is coming, and now is the time to prepare. Review your products, service delivery, marketing and sales operations. As the economy fully reopens at the end of July, consumer spending will take off and businesses that are prepared will gain the most. Those that innovate now will enjoy the benefits of a newly optimistic and buoyant economy.