Freelancer confidence improves but has still not recovered after Brexit slump

Despite a slight quarter-on-quarter rise in confidence and a 13 per cent increase in earnings, a structural shift caused by Brexit is preventing the confidence of the freelance sector from returning to pre-referendum levels.

According to IPSE and PPH's (PeoplePerHour) quarterly Confidence Index, 34 per cent of UK freelancers are now more confident in their business performance for the next 12 months, compared to 30 per cent last quarter. Meanwhile, the number of freelancers who are less confident in the wider economy has dropped from 70 per cent at the end of 2017 to 61 per cent in the first three months of 2018.

This quarter’s Confidence Index also shows the end of the recession the sector experienced in the second half of 2017 after freelancer day rates dropped for two consecutive quarters. Not only have they seen their day rates rise in the first quarter of 2018; 58 per cent of freelancers now also expect them to continue to rise over the next 12 months. If that proves correct it would equate to an increase of approximately 7.5 per cent.

While there is positive news here for freelancers across the UK, the overall picture is still distinctly negative. Freelancer confidence – both in their own business performance and the wider economy – remains in the negative figures. It has still not recovered since its drastic decline after the structural shift caused by the Brexit vote.

Professor Andrew Burke, Dean of Trinity Business School, Dublin, said: “As multiple Confidence Indexes since Q2 2016 have shown, Brexit has driven a huge structural change in the freelance sector. While before the referendum, freelancers were upbeat about the economy and their businesses, now their confidence in both has dropped significantly. The sector is still trying to recover the day rates and earnings it has lost since the referendum.

“On the positive side, the freelance sector has now pulled out of the recession of late 2017. Freelancers have been improving their business performance by adopting firm-level strategies to build their brands and reputation, network and collaborate with other freelancers and drive innovation in their services.”  

Suneeta Johal, IPSE Head of Research, said: “Although there is something to celebrate in the recent rise in freelancer confidence, what we see here is clearly a mixed picture. Freelancers have just not been able to return to the same levels of confidence or daily income as before the referendum – or even before the start of last year.

“Government policies now seem to be the biggest factor holding back the sector’s tentative confidence, however. From the threat that the disastrous changes to IR35 will be extended to the private sector to the call for evidence on shifting the VAT threshold, Government policy has created too much doubt and concern for freelancers at this already uncertain time as the UK prepares for Brexit. It’s time it started taking this vital and innovative sector seriously and gave it the support it so desperately needs.” 

Xenios Thrasyvoulou, founder and CEO of PPH, added: “Brexit has certainly had a detrimental impact on freelancer confidence, but it’s encouraging to see that things are now taking a turn for the better. Not only has the short recession come to an end, but there is every reason for optimism, as PPH freelancers expect a 12 per cent day-rate increase.

“As freelancers are seeking new avenues to secure their income, they are discovering that collaboration can be beneficial. Networking enables the cross-referral of clients, helping to ensure a continuous revenue stream while enhancing customer service by facilitating full-job completion. As enterprises and businesses of all sizes increasingly turn to freelancers for their skills, this way of work is becoming more mainstream, increasing year on year with 57 per cent of employers who use PPH expecting to hire more freelancers than employees in the next five years, which means the outlook for freelancers is certainly positive as demand continues to rise.”