Confidence among the UK's 2 million-strong freelance workers has fallen to its lowest level ever, driven by both government policy and Brexit.
A survey by the Association of Independent Professionals and the Self Employed (IPSE) said that only 19 per cent of freelancers said that they were confident about their business performance over the next 12 months. The result is down nine percentage points from the previous quarter.
Many SMBs today use freelance workers, and IPSE's study relates to the top three levels of freelancers using the Standard Occupational Classification (SOC): managers/directors (SOC1), professionals (SOC2) and associate professionals/technical occupations (SOC3).
More than half (52 per cent) of all respondents said that business confidence for the next 12 months has decreased, and 92 per cent expect costs to increase.
Brexit has impacted the entire British economy, and its effect on confidence is not new; 59 per cent of freelance workers cited it as a reason for poor performance in Q2'17. However, it was joined by changes to the government policy regarding taxation and regulatory constraints, announced this year, which specifically impacts freelancers. IPSE reports that it has witnessed freelance workers abandoning contracts as a result of the changes to IR35 legislation.
Two-thirds of freelancers were concerned about the wider economy; 69 per cent expected a ‘major slowdown'.
IPSE's head of research, education and training, Suneeta Johal, said, ""Freelancers attribute their loss of confidence to the economic pressure from Brexit and the negative consequences of government policy relating to the regulation and taxation of freelance work…
"The good news is that these 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 go some way to increasing their waning confidence."
"The managerial, professional and technology-based freelancers in this survey are in a position to observe the early indicators of a slowing economy as they are typically contracted on projects involving business growth, innovation, technological change and entrepreneurship," said Professor Andrew Burke, dean of Trinity Business School in Dublin and chair of the Centre for Research on Self-Employment. "They are clearly observing their business clients scaling down plans for firm growth and innovation. These findings are very concerning indeed."
IPSE did have some positive news for freelancers, reporting that day rates of pay remained strong and time in work was high, above 80 per cent - despite the lack of confidence.
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