According to new research by IPSE and PeoplePerHour (PPH) in the last quarter of 2017, freelance confidence is again on the decline.
IPSE’s quarterly confidence index found that freelance confidence in the UK economy is on a downward trend once again after a record low in Q2 2017 and marginal recovery in Q3. However, the Q4 results Business confidence remains low but has continued to recover from the -25.3 low of Q2.
What’s Knocking Freelance Confidence?
A combination of factors seems to be to blame for the confidence downturn.
Lowering business performance: The top three factors lowering business performance in Q4 2017 were named as the EU Referendum outcome (i.e. Brexit), the Government’s fiscal policy relating to freelancers and Government regulation relating to freelancers.
Reduced demand: There’s also been a drop in demand for freelancers, with respondents saying they have only been on assignment for 78% of the time.
This ‘capacity utilisation’ figure is the second lowest on record and continues a trend of dropping demand since Q1 2017, when freelancers reported they were working 85% of the time.
Falling pay rates: Freelancers’ day rates are also down. They saw a steep 17% fall in the last quarter of 2017 and are 4% lower than they were in Q4 2016. Overall, there has been a 3% decline in day rates over the last year and the freelance business sector has now moved into recession after two consecutive quarters of negative growth.
Increasing business costs: 81% of freelancers believe their business costs will rise. They’re expecting a 10.3% increase during 2018.
Looking to the Future
Although the Index shows that freelancers expect their businesses’ performance to continue to decline over the next 12 months and their lack of confidence in the UK economy has deepened, they are earning more than twice as much as equivalent employees.
Also, despite their concern over negative factors they can’t control, such as Brexit and Government influences over their business and success, they do feel there are things they can do themselves to improve business. When asked about the positive influences on their business performance, freelancers placed brand/reputation building top of the list, followed by innovation in service offerings and targeting new markets.
Suneeta Johal, IPSE head of research, said: “Brexit has consistently been cited as a significant factor behind freelancers’ lack of confidence but, on top of that, the alarming decrease in their rates of pay is particularly concerning.
“With inflation rising over the quarter it is unsurprising that freelancers also stated that they expect their business costs to rise. Ultimately, this means that freelancers expect their finances to feel squeezed throughout 2018.”
Does this reflect your experience of freelancing in recent months, or have you seen an upturn in demand and/or pay? Are you confident about your future or concerned about rising costs? Share your thoughts!