Freelancers’ 12-month confidence index in the UK economy has increased to its highest level since 2017.
Coronavirus continues to be the top factor negatively influencing freelancers’ business performance.
Freelancers’ spare capacity recovered slightly for the second quarter in a row but remained very high at 4.3 weeks.
Freelancers expect an average decrease of 9.1% in their day rates over the next 12 months.
In the fourth quarter (Q4) of 2020 freelancers were beginning to feel more optimisic with confidence in both the economy and their businesses increasing. However, the report reveals that although freelancers were on average working more this quarter compared to Q3, they were working for lower day rates. There are also large concerns amongst highly skilled freelancers about government tax regulations in the wake of the IR35 changes due to come into force in April 2021.
Freelancers’ 12-month confidence index in the UK economy remains in deep negative territory at -56.2 this quarter.
Coronavirus continues to be the top factor negatively influencing freelancers’ business performance.
Freelancers’ spare capacity recovered slightly from Q2 2020 (5.5 weeks) but remained very high at 5 weeks.
Freelancers expect an average decrease of 12.6% in their day rates over the next 12 months.
In the third quarter (Q3) of 2020, freelancers continue to feel the impact of the coronavirus pandemic. Although their spare capacity has decreased very slightly from 5.5 weeks to 5 weeks this quarter, the lack of work continues to have a negative impact on earnings. Furthermore, freelancers expect an average decrease of 12.6% in their day rates over the next 12 months.
This longitudinal report is the culmination of seven years’ worth of Confidence Index research and analysis. For the first time, we are able to look back and examine the trends. We can see the effect that political decisions and macro-economic variables have had on freelancers’ confidence and understand the impact of these factors by setting them in the wider context over a longer period of time.
Freelancers expect the UK economy to deteriorate even further in the next year, with a 12-month UK economy index score of -53.4.
The coronavirus pandemic (81.1%) is now not only the top negative influence on freelancers’ businesses, but it is also selected as a top factor by all three freelancer occupational groups.
In Q2 2020, freelancers’ spare capacity reached an unprecedented record high of 5.5 weeks, increasing substantially since Q1 2020 when it was at 3.3 weeks.
The great decline in capacity utilisation alongside a slight fall in day rates led to a large 25 per cent drop in quarterly earnings from £20,821 in Q1 2020 to £15,709 in Q2 2020.
In the second quarter (Q2) of 2020, freelancers’ average income dropped by a record 25 per cent, according to the latest Freelancer Confidence Index.
The drop in income was driven by a sharp fall in the average number of weeks freelancers worked this quarter. Between March and June, the average freelancer went 5.5 weeks out of 13 without work. Combined with a 3 per cent fall in freelancers’ average day rates, this led to average quarterly earnings declining by 25 per cent from £20,821 in Q1 2020 to £15,709 in Q2 2020.
The 12-month freelancer business confidence index fell substantially from -23.2 to -57.3, showing that freelancers expect the deterioration of their business performance to continue over the next year.
Freelancers’ earnings have also fallen by 8.4 per cent over the first quarter of 2020.
Freelancers expect a further decrease of 20% in their day rates over the next year.
Freelancers’ spare capacity amounts to 3.3 weeks in Q1 2020, which is the second highest level of spare capacity since surveys began.
The first quarter (Q1) of 2019 has proven to be very tough for freelancers as they have experienced a 17 per cent decline in income comprised of both a fall in their day rates and the volume of business undertaken.
Day rates have declined by 15 per cent from £474 to £405 while spare capacity has risen by four percentage points from 21 per cent to 25 percent.