IPSE has today published its latest quarterly report of the Freelancer Confidence Index for the second quarter of 2022. The index found that freelancers’ confidence in the UK economy for the next 12 months has fallen sharply from -27.4 in Q1 2022 to -56.7 this quarter. For context, the fall represents the lowest level of freelancer confidence in the economy since the early days of the pandemic in Q1 2020.
We know from our previous quarterly reports that freelancers, still recovering from the impacts of the pandemic on their freelance businesses, are having to contend with a number of economic challenges.
With both Citi Bank and the Resolution Foundation now predicting inflation could rise to 18 per cent by 2023, one issue now stands above the rest: the cost-of-living crisis.
For self-employed workers, the rise in inflation poses serious risks to their financial well-being. Despite increases in work, day rates and quarterly pay, the FCI finds that the majority of freelancers (83%) now expect their input costs to increase over the next 12 months. Moreover, almost two-fifths of freelancers (37%) are now incurring business debt, with 15% incurring debt via credit cards issued in the name of their self-employed business.
With the pandemic already causing freelancers to incur debt and fall out of self-employment, the cost-of-living crisis could add even further pressures to one of the most dynamic and innovative parts of the UK economy.
At IPSE, we are calling on the new Prime Minister to intervene and help those freelancers that are struggling to make ends meet.
Similarly, we have written to both leadership candidates, Liz Truss and Rishi Sunak, outlining the key issues facing the sector and whilst we’re pleased that Liz Truss has pledged a review into IR35, we will work tirelessly to ensure this commitment is delivered should she become the next Prime Minister.
Furthermore, we have called on the new Prime Minister to think about the self-employed when they implement their plans to tackle the cost-of-living crisis. While freelancers aren’t the only group affected by the crisis, they are uniquely vulnerable to the rise in inflation. Self-employed workers were among the hardest hit by the pandemic and their incomes and businesses have still not recovered. If the cost-of-living crisis worsens, then they could suffer years of economic turbulence - without a decent chance of recovery.
Inflation could also seriously damage those freelancers on the lower end of the pay scale and that’s why we’re also calling on the government to permanently suspend the Minimum Income Floor used to determine Universal Credit payments for self-employed claimants.
At IPSE, we are continuing to represent our members and the wider self-employed community in tackling the cost-of-living crisis and will be publishing our results from our survey of members on this issue over the coming weeks.
Read the full report here
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