According to the IPSE’s (Association for Independent Professionals and the Self-Employed) latest freelancer confidence index, the end of COVID-19 restrictions has lead to a widespread increase in freelancer confidence.
The IPSE’s Freelancer Confidence Index Q2 2021 showed that the three-month business confidence index had increased from -13.9 in Q1 to 8.2. This represented the first positive level on the index since the second quarter of 2019 (3.5), as well as the highest rating since a level of 8.4 was recorded in Q2 2018.
Looking further forward, the report revealed an even greater level of optimism, with the 12-month business confidence index recording its highest level since Q2 2015, with a rating of 13.3. This shows a sharp increase from the low confidence levels recorded in Q1 2021, when the index showed a score of -15.6.
The increased confidence came in spite of average quarterly freelancer earnings in the UK falling ten per cent to £18,652, as average day rates fell from £445 in Q1 2021 to £397 in Q2. The IPSE attributed this decline to a decrease in freelancer contracts, likely as a result of the new IR35 private sector rules coming into force in April 2021.
However, freelancers were again confident over their rates moving forward. The report showed that 63 per cent expected their rates to increase over the next 12 months, compared to 23 per cent who expected them to decrease and 15 per cent who expected no change. On average, freelancers expected an increase of 8.7 per cent in day rates over the next year.
The IPSE commented on the report’s findings: “As the economy opens up and kicks into gear again, freelancer confidence seems to be surging. Freelancers’ earnings are not yet matching these expectations, however – and the biggest factor in this seems to be more freelancers competing for fewer contracts after the changes to IR35. But the fact that freelancer confidence is surging is optimistic for the economy and the sector – even if the circumstances have not yet caught up.”
“The freelance sector is clearly raring to go, but is materially held up by the impact of the IR35 changes working through the contracting market. This may indicate an opportunity for government to boost the freelancing sector and thereby aid the economic recovery effort: by clearing the uncertainty and confusion left by the changes to IR35.”
