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- Freelancer Confidence Index Q4 2021
Freelancer Confidence Index Q4 2021
- 17 Mar 2022
- Joshua Toovey
- Freelancers’ confidence in the UK economy has significantly decreased compared to last quarter – falling from -13.2 in Q3 2021 to -19.1 in Q4 2021
- Freelancers’ average quarterly earnings have risen to £29,574 this quarter - the highest reported quarterly earnings figure since prior to the EU referendum
- This was driven by rising day rates (up from £535 to £584) and falling spare capacity (down from 3.1 to 3.0 weeks)
- Worries about the cost of living are starting to impact freelancers, with 81% predicting a rise in their business costs over the next 12 months
With the Office for National Statistics (ONS) finding that economic growth stalled unexpectedly in Q4 2021, freelancer confidence in the economy over the next 12 months has fallen dramatically from 13.2 in Q3 2021 to -19.1 this quarter. Moreover, the confidence self-employed workers have in their own businesses has fallen too, with the index decreasing from -2.6 in Q3 2021 to -10.5 in Q4 2021.
When analysing the specific reasons behind this fall, the index shows that there are two main issues affecting freelancers: the implementation of IR35 tax legislation followed by government regulation relating to hiring freelancers. With the full impact of IR35 changes on self-employed workers only beginning to be revealed in Q3 2021, the index for Q4 2021 again reveals that the controversial tax reforms are continuing to damage the sector.
Despite the rapid spread of the Omicron variant in the UK in Q4 2021, the coronavirus pandemic was only the third most selected detrimental factor for freelancers. COVID-19 was only the top factor for SOC3 associate professional and technical freelancers (65.1%), with this group most likely to be unaffected by the introduction of IR35 reforms in the private sector.
With inflation rising to a 30 year high in December 2021, the report also shows that freelancers are worried about rising costs. Over 4 in 5 (81%) freelancers predict rising business costs over the next 12 months.
To counteract inflation, the cost of living crisis and IR35 associated costs, day rates have increased yet again from £535 in Q3 2021 to £584 in Q4 2021. Moreover, with freelancers experiencing the lowest average number of weeks without work since Q4 2019, average quarterly earnings have risen from £25,551 in Q3 2021 to £29,574 this quarter. For context, this represents the highest reported quarterly earnings figure since prior to the EU referendum.
Following two years of economic uncertainty and COVID-19 restrictions, the report found that almost 2 in 5 freelancers (38%) are in debt, with over 1 in 10 (16%) now accruing debt via credit cards issued in the name of their self-employed business. Concerningly, the number of freelancers reporting that they have no business debt in Q4 2021 (59%) is lower than the previous quarter (67%) - showing that more and more freelancers are unfortunately falling into debt.Read the full report here
Meet the author
Senior Research and Policy Officer
- Joshua Toovey
- 6 Apr 2022