Freelancers working through umbrella companies or limited companies have been bombarded with mixed forecasts of their prospects for 2011, with some predictions rather more upbeat than others. The PCG’s Managing Director, John Brazier, for instance, has delivered a robustly positive outlook for UK contractors over the next twelve months in a message on the organisation’s website. He acknowledges that the economic situation will make the year challenging, but believes that the contracting community is the one sector of the workforce ready to face the challenges and seize new opportunities.

A rather more guarded forecast has emerged from the Confederation of British Industry (CBI), however. The first few months of 2011 in particular are likely to be an especially difficult time for British businesses, according to CBI Director General Richard Lambert.

Sir Richard cited the new VAT rise, uncertainties in the Eurozone and public sector spending cuts as the chief reasons for his organisation’s caution. Each of them will weigh heavily on the private sector, he believes, and will act collectively to reduce gross domestic product in the first quarter of 2011 to 0.2 per cent. However, he is also optimistic that economic conditions will improve later in the year and believes that a double dip recession is now unlikely. PAYE umbrella contractors may well breathe a collective sigh of relief at this, as many had feared the worst for 2011.

Growth is likely to remain at two per cent over the next twelve months, rising to 2.4 per cent in 2012, the CBI predicts. Whilst this is “not much to shout about,” Sir Richard believes it will be sufficient to keep the public finances on course and unemployment under control.

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