Despite record levels of inflation and rumours of a global economic recession, new research from the Association of Independent Professionals and the Self Employed (IPSE) has revealed on Monday that freelancers’ confidence in their own businesses, in the next three months, has risen from -11.0 in Q4 2021 to 2.2 this quarter.
For context, the growth in confidence represents a return to positive figures for the first time since Q2 2021.
Released every quarter, the IPSE Confidence Index surveys IPSE and PeoplePerHour members on the state of the UK’s freelancing sector, tracking confidence in their own freelance businesses, the UK economy and other key economic indicators such as average day rates, quarterly earnings and business debt.
In Q1 2022, the index found that freelancers expect their day rates to increase by an average of 13.5 per cent over the next 12 months. This represents a significant increase from Q4 2021, where self-employed workers anticipated an increase of just 3.6 per cent.
Moreover, as the country moves further away from the pandemic, the index finds that freelancers are increasingly satisfied with their work, job-related stress has fallen to its lowest levels since Q3 2019 at 5.84 (on a 10-point scale where zero is not at all stressed and 10 is extremely stressed), and job satisfaction has grown to 5.81 (on a 10-point scale where zero is not at all satisfied and 10 is extremely satisfied).
Negativity towards the economy
The index, however, finds that confidence in the economy as a whole still remains low. It found that freelancers’ confidence in the UK economy for the next three months has increased only slightly from -23.7 in Q4 2021 to -23.1 this quarter.
In Q1, the most detrimental factor (64.7%) on freelancers’ business performance was the state of the UK economy. This can be largely attributed to the cost of the living crisis engulfing the UK as a result of rising inflation, the war in Ukraine, Brexit and rising energy and goods prices combining to heighten fears of an economic recession.
The other main factors impacting freelancers last quarter were government tax policy (62.1%) and regulations relating to hiring freelancers (59.2%).
Derek Cribb, CEO of IPSE said, “After a mixture of pandemic uncertainty and post COVID-19 inflation, life for freelancers is finally starting to look up. Work is returning, confidence in their own business is growing, and stress is falling rapidly. In other words, the dynamism and energy of the self-employed sector is finally beginning to rear its head once more.
“However, freelancer confidence should not be taken for granted. The cost-of-living crisis is still wrecking the UK economy and the government needs to ensure that self-employed workers aren’t pulled back into the abyss.”
Rising debt and costs
Concerningly, with worries over the economy rising, the report found that the majority of freelancers (86%) now expect their input costs to increase over the next 12 months – rising from 81 per cent in Q4 2021.
It also found that almost two-fifths of freelancers (39%) are now incurring business debt (slightly up from 38% in Q4 2021), with 16 per cent incurring debt via credit cards issued in the name of their self-employed business.