Contractor pay up, but UK economy confidence dips.

The IPSE and People Per Hour have released the results from their latest Confidence Index report.

Surveying 600 contractors, the Confidence Index revealed that overall confidence in the performance of the UK economy over the next 12 months dipped to -48.1.

Confidence over the first quarter of 2019 also dropped to the second-lowest level on record. When asked, contractors said the two factors doing most to lower business performance (and probably therefore also confidence) are Brexit and government taxation.

However, there is good news from this report, with the final quarter of 2018 showing a boost to rates of pay – average day rates rose by 21% with average quarterly earnings rising to ￡24,776 – the highest level since Q3 2017.

As many as 54% of contractors expect their rates to increase further over the next 12 months.

The IPSE’s (Association of Independent Professionals and the Self-Employed) Head of Research, Education and Training, Suneeta Johal, commented on the findings, “News that freelancers’ pay is up – and by a remarkable 21 per cent – is obviously very welcome. But there is a stark warning here too.

“Freelancers’ confidence in the wider economy is down to the lowest level on record because of Brexit and the political turbulence of the last two years.

“The UK’s freelancers may, in the short-term, be benefitting from the pay bump caused by Brexit uncertainty, but in the long-term, ongoing political and economic turbulence can only do them harm. In fact, our Confidence Index shows that freelancers’ confidence in their businesses over the next 12 months has fallen to the lowest level since 2017. 

“For freelancers, all this is also exacerbated by the knowledge the government is going to push the disastrous changes to IR35 tax legislation through to the private sector.

“Freelancers and the self-employed are one of the most dynamic and productive sectors of the UK economy. For the sake not only of them, but also Britain’s economic future after Brexit, the government must do more to support them.

“The government must scrap the hugely damaging IR35 changes and should also give freelancers and all businesses the security and stability they need on Brexit: by taking ‘no-deal’ off the table, guaranteeing the easy passage of manufacturing goods and by agreeing a coherent and sensible plan for the future of financial services.”

Xenios Thrasyvoulou, founder and CEO of PeoplePerHour, added, “It is a welcome boost and a testament to the skill of freelancers to see such a large rise in their day rates in the face of economic uncertainty and two quarters of negative growth.

“However, it is concerning that there is such a lack of confidence in the bigger picture, and the government should take note. The proposed changes to fiscal policy in the sector will be damaging to this large and dynamic part of the workforce, who contribute so much to the economy.”

Lucy Smith is Managing Director of Contractor Umbrella Ltd.