• 13 Apr 2023
• Joshua Toovey

• Freelancers’ confidence in their own businesses for the next three months has increased from -17.7 in Q3 2022 to -8.6 this quarter
• Almost nine in 10 freelancers (88%) believe that their costs will increase in the next 12 months
• Over the last quarter, freelancers' spare capacity has increased slightly, increasing from 2.9 weeks in Q3 2022 to 3.2 weeks this quarter.

With rising inflationary pressures and an engulfing cost-of-living crisis, it could be expected that freelancers’ confidence in their own businesses would be declining. Instead, freelancers’ confidence in their own businesses for the next three months has reversed this trend and slightly increased from -17.7 in Q3 2022 to -8.6 this quarter.

The index also found that three-fifths of freelancers (60%) were less confident in the state of the UK economy over the next 12 months. Similarly, freelancers' spare capacity has increased slightly since Q3 2022, increasing from 2.9 weeks to 3.2 weeks without work this quarter.

Factors lowering freelancers’ business performance

When analysing the reasons behind the recent fall in freelancer confidence, the FCI revealed that the state of the UK economy (63.2%) was the most detrimental factor impacting self-employed workers.

The other main issues impacting self-employed workers over the past quarter were government tax policy relating to freelancing (54.1%) and government regulation relating to hiring freelancers (48.0%).

Rising debt and costs

Concerningly, over half of freelancers (51%) are now incurring business debt which is an increase on Q3 2022, where 42 per cent of freelancers were incurring business debt.

Almost one in five freelancers (19%) are now incurring debt via credit cards issued in the name of their self-employed business – slightly up from 18 per cent in Q3 2022.

The index also revealed that the majority of freelancers (88%) now expect their business costs to increase over the next 12 months, with freelancers forecasting an average increase of 22.5 per cent in their business costs over the next year.

Read the full report here