Freelancers’ confidence in the economy and their businesses hit a record low in the second quarter of 2017, according to IPSE’s quarterly Confidence Index.
The outlook for the next 12 months shows that just 19 per cent of freelancers express confidence in their business’s performance.
Alarmingly, over half of all respondents (52%) said confidence in their business for the next 12 months has decreased.
Two-thirds of freelancers also expressed grave concerns about the wider economy, with 69 per cent of respondents predicting a major slowdown.
What's prompted pessimism?
Two factors stand out as significant drags on freelancer confidence; government policy and Brexit.
Four out of five freelancers believe that government fiscal and regulatory policies serve as the main constraints on their freelance business performance.
This can be linked to the roll-out of changes to the taxation of freelancers working in the public sector. Because of the damage this policy has caused, extending it to the private sector would provoke significant negative sentiment towards the government.
While freelancers have always believed that leaving the EU will have negative consequences for the UK, this view is now more widespread than ever.
According to the most recent IPSE report, more than half of the respondents remain convinced that Brexit will contribute to a decline in the economy.
With the negotiations now in full swing, it has become clear that Britain will probably cease to be a member of the European single market.
These events might have increased the level of pessimism about the economy, considering one in ten freelancers regularly takes contracts abroad.
The declining confidence among freelancers may also be driven by the anticipated rise in their business costs. In fact the vast majority – 92 per cent – of freelancers are expecting their business costs to rise.
This might be related to the continued weakness in sterling, which directly aects most freelancers who personally cover business costs such as accountancy, marketing and equipment. As a result, the expected drop in business performance may not be just because of the slowing UK economy, but also because of the expectation that higher business costs will squeeze profit margins.
On the positive side
In contrast to the low confidence levels, freelancers’ day rates reached the highest level reported in this survey, amounting to an almost five per cent increase since the first quarter of 2017. However, the majority of respondents (55%) said that the current day rates are not sustainable.
This might be associated with the inflationary pressures on businesses and consumers, which remained higher than average during this quarter.
The demand for freelance work has also remained persistently high, with freelancers on assignment 83 per cent of their time.
One small consolation is that the main negative drivers are all within the control of the government and, if addressed, could and should help alleviate concerns. Successful Brexit negotiations and reassuring freelancers of their tax status would also go some way to increasing waning confidence.
By Inna Yordanova
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