Financial fears sink freelancer confidence to levels not seen since covid
Freelancer confidence in the UK economy has fallen to its lowest level since the early days of the coronavirus.
The Association of Independent Professionals and the Self-Employed made the disclosure yesterday, after its confidence index fell from -27.4 in January to March to -56.7 for April to June.
So not since the first days of the covid-19 health crisis (when it plummeted to -77.8) has the 12-month economic outlook of the self-employed been so low.
'Not the right time to revoke SEISS or similar'
Similarly, freelancers’ three-month confidence in their own ventures has receded from +2.2 in Q1 2022 to -11.4, the lowest level since early 2021 when covid restrictions were biting the self-employed.
But speaking to FreelanceUK, the association last night said that despite this ominous two-fold hark back to the days of the pandemic, the answer isn’t a scheme like SEISS to prop up the self-employed.
“We don’t think the time is right to bring back SEISS or something similar,” IPSE’s director of policy Andy Chamberlain told FreelanceUK.
“The Self-Employment Income Support Scheme was effectively an income replacement scheme to help those who couldn’t work due to the pandemic and lockdown restrictions. But there are no restrictions now”.
'Self-employed could be pulled back into the abyss'
In a new report on the quarterly index, IPSE’s chief executive Derek Cribb warns that unless the government takes action, “self-employed workers could find themselves pulled back into the abyss.”
Particularly worrying, more than 8 in 10 freelancers said they expected their input costs to rise over the next 12 months, with an average 15.1% leap in business costs predicted.
Thirty-seven per cent of freelancers are incurring debt, 15 per cent of which is on credit cards in their self-employed name, and 78% said the top factor adversely affecting their business was the economy.
And almost half said they were “less confident” in their business’s prospects over the next three months.
“Anecdotally, yes I think there are concerns over the state of the economy and the big macro-economic challenges facing the UK,” Mr Chamberlain said yesterday, asked if economic concerns among the self-employed have deepened since their responses were collated.
He added: “The pound is weak against the dollar and there is no end in sight for the war in Ukraine. There is still hope a recession can be avoided, but many economists and even the Bank of England are pessimistic.”
'Signs the government is listening'
As to remedial action to help freelancers, Mr Cribb spoke of the need for a fairer taxation system for the self-employed, specifically regarding IR35.
“Thankfully there are signs that the government is already listening…[as] the frontrunner for Number 10, Liz Truss has committed to announcing a review into IR35”.
Mr Cribb also said: “We welcome her announcement, and we hope that she follows through on her word, if she is successful in her bid to become prime minister.”
'Hard to unravel'
In her campaign to become PM, Ms Truss also promised to reverse the National Insurance Contributions increase – and as they pay two classes, the self-employed will likely be supportive.
But accountant Chris James is sceptical: “[But] when? [And] what about the rise in thresholds that had an opposing effect?”
Head of limited company solutions at WorkWell, Mr James also asked: “And if the 1.25% is dumped, what about the Health and Social Care Levy due in April 2023 - which replaces the NIC rise, and is the same size? [It’s] hard to see how to unravel this in headline-friendly terms.”
5th September 2022