IPSE: Freelancers have confidence in the economy

Tuesday 8 September 2015

The latest Freelancer Confidence Index from the Association of Independent Professionals and the Self-Employed (IPSE) has revealed that the future is looking bright for contractors in the UK.

The 700 freelancers who responded to the survey suggested that business confidence was high, and previous surveys indicate that this metric has been rising since the final quarter of 2014. The change implies that businesses are more prepared to make investments, and that consumers are feeling positive, possibly thanks to low inflation and rising wages.

Confidence may also have increased as a result of May’s General Election. The high level of uncertainty during the buildup to the vote could have prompted some businesses to put off major investments until questions about taxation and corporate support were answered. The election of a majority government is likely to have boosted this impact, particularly amid concerns of a hung parliament and a prolonged period of negotiations prior to forming a government.

However, it is worth noting that the responses were collected before chancellor George Osborne delivered his summer Budget, which contained measures that have not been universally popular with freelancers, so the figures may not be a completely accurate reflection of the current economic climate.

Despite high levels of confidence, contractors reported rises in the cost of doing business over the last quarter. This may increase further from the end of the year, when Bank of England governor Mark Carney has suggested that the Monetary Policy Committee may be prepared to raise interest rates from their present historic low of 0.5 per cent.

However, the reported cost of doing business as a freelancer did rise slightly over the last quarter. This has been attributed to a jump in the cost of air travel, even though the low price of oil has kept other transport costs relatively low.

The potential for restrictions on claiming travel expenses for contractors working through limited companies is another factor that could have an impact on running costs in the future, so it is worth bearing in mind when planning ahead.

In more positive news, freelancer pay increased by an average of 11 per cent over the quarter, showing that contractors are increasingly valuable to companies who need to access temporary or targeted services from highly skilled workers.

This is despite the fact that overall demand for freelancers fell over the same period, suggesting that workers in particular industries have become particularly valuable, whereas some have not experienced the same boost.

Yet the overall picture appears to be positive. IPSE’s economic advisor Lorence Nye said: ”It is hardly surprising therefore that freelancers are also very confident about the wider economy. In fact they are more optimistic about the shape of the economy than their own businesses. Strong macro-economic data showing strength in the UK economy underpins much of this faith in the UK’s economic potential. Part of the optimism about the future is an acknowledgement of prior difficulties in the economy.”

While it is difficult to predict what the future will hold, freelancers should be able to take advantage of both growing business confidence and increased consumer spending power in the latter half of 2015.

By Victoria McDonnell

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