New research from the Association of Independent Professionals and the Self-Employed (IPSE) and PeoplePerHour has revealed that freelancers’ confidence in their own businesses fell to the lowest level in two years during the third quarter of 2022.
During Q3 2022, the IPSE’s Freelancer Confidence Index showed that freelancer confidence had fallen to -17.7, down from –11.4 in Q2 2022 and the lowest figure since the height of the COVID-19 pandemic and lockdowns in Q3 2020.
The research showed that the state of the UK economy was the main factor cited by freelancers for their lack of confidence, being named by 75.9 per cent of respondents. Interest rates (55.6 per cent) and Brexit (51.5 per cent) were the other major issues impacting freelancers during Q3.
Concerningly, amid the mounting cost-of-living crisis, freelancer earnings have also fallen, with the average day rate falling from £528 in Q2 to £503 in Q3, leading average quarterly earnings to fall from their Q2 figure of £27,486 to £25,877.
42 per cent of freelancers said they were incurring business debts in Q3, up from 37 per cent in Q2, and 18 per cent were incurring debt on credit cards issued in the name of their business, compared to 15 per cent in Q2. 85 per cent expect business costs to rise over the coming year, with an average increase of 15.1 per cent forecast.
IPSE Senior Policy and Communications Adviser Fred Hicks said: “Having endured a maelstrom of tax rises and worsening economic conditions, it is unsurprising to see that freelancer confidence continues to fall. But for it to plunge to the levels we saw at the height of the pandemic is yet another worrying indicator that the health of our freelance sector is at risk.”
“With costs set to rise but day rates lagging, the Q3 results are a reminder of the impossible choice freelancers must make between absorbing unaffordable cost increases, or risking client retention by increasing their rates.”
Hicks added: “From programmers and designers to engineers and consultants, freelancers provide their services in all corners of the economy – a decline in the sector would be felt just as widely. Government must avoid piling further pressure on the already strained freelance sector at the next Budget and instead take the opportunity to deliver bold measures to support this dynamic and talented segment of the economy – from meaningful improvements to IR35 legislation and firm action to clamp down on late paying clients.”
