Most freelancers are confident in their business performance in the year ahead, according to a new report by the Association of Independent Professionals and the Self-Employed (IPSE), and People Per Hour (PPH).
The organisations’ Confidence Index showed that in the second quarter of 2018, freelancers’ confidence in their business performance stood at 5.3 (from -100 to +100) – the highest business confidence reading since 2015.
Day rate pressure
This is despite the fact they are up against a range of negative developments. This includes falling day rates, rising business costs and concerns over Brexit.
“In Q2 2018, their [freelancers’] average day rates fell from £430 in Q1 2018 to £394 – a drop of 8.4%,” the report said. “Average quarterly earnings have therefore dropped too – from £23,701 in Q1 2018 to £20,797. With high inflation already taking its toll, this is a major blow for freelancers. And, although about six in ten freelancers expect their day rates to increase over the next 12 months, the expected increase of 7.3% is not enough to make up for the recent fall. There is also the worry of rising business costs. Almost three quarters of all freelancers expect their input costs to increase over the next 12 months. In fact, the expectation is that costs will rise by as much as 13.7%. This is much more than the 2.4% inflation across the UK economy.”
Brexit raises big concerns
Brexit was cited as the top constraint on business performance followed by government taxation and regulatory policies relating to freelancing.
“Self-employed people’s confidence in their businesses is high. But it is not unshakeable,” Suneeta Johal, IPSE head of research, said. “Given the negative forces ranged against the self-employed right now, the government should make it a priority to reassure and support them. With Brexit named as the main factor dragging down self-employed confidence in the wider economy, the government should make securing a Brexit deal that works for the self-employed a key priority. It should also work to restore self-employed confidence in its own policies – not least by stepping back from any plans to extend the disastrous changes to IR35 to the private sector.”
The report explains that progress towards a soft Brexit, or even an entire rethink of the policy altogether, would help the performance of the UK freelance sector. The same would also be true for more supportive government policies for freelancers in the realms of taxation and regulation.
“Freelancers, by their very nature, are optimists and problem-solvers. So the fact that they’re able to find positivity in the face of relatively dismal figures perhaps shouldn’t surprise us,” Xenios Thrasyvoulou, founder and CEO of PPH, said. “But it does make their fears over Brexit all the more telling. 15% of the UK workforce now freelance in some capacity, full or part-time. The fact that this could be threatened by poorly planned Brexit strategies, or a return to further discussions of IR35 – as some politicians have hinted at – is deeply concerning.”