New research from the Association of Independent Professionals and the Self Employed (IPSE) has found that confidence levels among Britain’s two million freelancing and contracting professionals has strengthened modestly, but overall it remains disquietingly low due to Brexit uncertainties and Government policy.
Confidence levels among the UK’s independent professionals plunged to record lows in the second quarter of this year, according to IPSE’s quarterly Freelance Confidence Index study. Currently, however, confidence appears to be rallying, albeit modestly. 31% of the contracting professionals surveyed for the latest index expressed confident optimism in their prospects for the coming 12 months, a rise of 12 percentage points on the level recorded in the preceding quarter.
While pessimism remains prevalent amongst a majority of contracting professionals, there are small signs it may be diminishing. 60%of respondents said that they felt pessimistic about the broader economy, a fall of 9% points on the 69% who expressed this sentiment in the previous quarter.
Yet despite modest improvements in confidence, daily pay rates for freelancers and contractors actually fell from the level recorded in the previous survey. To compound matters, 11% of those polled reported that they expect business input costs to increase.
IPSE’s Head of Research, Suneeta Johal, noted that respondents again emphasised that their primary concerns remained Brexit and Government policy. The latter, she said, could be connected with concerns that drastic changes to the way contracting professionals have been taxed within the public sector may be about to be rolled out to the private industry.
Ms Johal acknowledged that the Freelancer Confidence Index had traditionally found the third quarter to be a challenging one for freelancers. But, she added, if the Government could alleviate their worries about an extension of IR35 to the private sector, confidence may well continue to increase as it had in the latest quarter.
Commenting, Professor Andrew Burke, Dean of Trinity Business School in Dublin, said:
“These freelancers are professional and highly skilled, and – given they are involved in projects that drive growth and innovation, and have first sight of the plans of industry – they have become astute economic and business forecasters.
“Therefore, their expectation that the UK economy could be either heading for stagflation or, at best, experiencing a significant slowdown accompanied by high inflation is concerning.”
He went on to note that the real cost of the massive depreciation of sterling following the EU referendum result is now feeding into strengthening inflationary pressure on the cost of business, as the contractors polled have signalled. He added:
“Freelancers are already experiencing a tough 2017 with a profit squeeze driven by lower earnings and higher business costs.”