Optimistic macroeconomic environment bodes well for self-employed

Tuesday 6 May 2014

The macroeconomic picture in the UK is becoming a pleasant one, with optimism rising following Budget 2014. According to the PCG's latest economic forecast for April, this spells good news for contractors and freelancers, who are increasingly finding themselves in high demand as businesses look to grow.

Indeed, the latest figures from the Office for National Statistics have shown a rise in the number of people choosing to become self-employed - data that comes as a result of the strong contracting environment.

Georgios Nikolaidis, economic policy adviser at PCG, explained: "The economy continues to grow and healthy macroeconomic indicators should provide a conducive environment for businesses in the months to come.

“Unemployment and inflation are down, wages are on the rise and business investment is picking up. Forecasts are optimistic and the economy is expected to remain on the right track for the foreseeable future - gradually moving from the recovery phase to a period of full expansion."

Freelancers have come to take on an ever important role in the economic recovery and companies have to rely on highly-skilled professionals that can have an "immediate impact on their business", Mr Nikolaidis said.

As macroeconomic conditions strengthen, it will become even easier for contractors to operate, according the PCG.

Yet there are still pain points in the economy that the self-employed need to be aware of.

Broadly, youth unemployment and trade are the major threats to the economy. Youth unemployment is still high and is showing no signs of abating, while trade is acting as a drag on growth.

Mr Nikolaidis believes George Osborne's £1 trillion export target of 2020 is still "overly ambitious". This is thanks to high demand for imports, which will make a high trade surplus "unlikely".

The skills shortage will also put pressure on businesses and contractors, affecting the ability of the economy to expand.

Nevertheless, the self-employed are in a strong position going forward. The recent Report on Jobs from the Recruitment and Employment Confederation (REC) showed that over the coming year, almost half of businesses intend to draw on the services of temporary workers.

When asked about the use of agency workers, half of employers said they expect to increase their use of this group over the next three months. During the next four to 12 months, 48 per cent intend to take on temporary workers.

The same percentage also admitted that agency workers have helped them "respond to growth", highlighting the important role contractors play. This number is up from March, when just 25 per cent said the same thing.

Seventy-eight per cent of employers told the REC that short-term access to strategic skills was one of the main reasons for using contractors. This number has grown since March 2012, when 60 per cent said this.

Kevin Green, chief executive at the REC, explained that employer confidence is returning and accessing talent needed through contractors is key to this.

"As scarcity of skills continues to be an issue in key sectors like IT, engineering and logistics, contractors, interim managers and agency workers are becoming more important than ever to help businesses quickly access the skills they need to stay competitive," he added.

By Victoria McDonnell

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