Contractors' prospects set to plateau in 2015

Their financial performance and pay appear to be the areas of working in the UK in 2015 that contractors feel the most positive about, the country’s contracting body has signalled.

According to the body, IPSE, income for its members accelerated on the eve of 2015 by 7.4%, from £27,596 in the third quarter to £29,643 in the fourth quarter.

Daily earnings for such contract professionals reflect the uptick, having risen from about £506 between July and September, to about £524 between October and December.

And although more than half of them now expect their pay to stay the same, at least a quarter of the IPSE members predict that their rate will climb even higher over the next 12 months.

 “Freelancers not only continue to earn more in a single quarter than an average employee earns in a year, but their rate of earnings growth is also significantly higher,” IPSE said.

But other findings from the body, officially known as the Association of Independent Professionals and the Self-Employed, suggest contractors will need the extra take-home pay.

That’s because 51% of them expect their costs to increase in 2015 – a year when the UK’s economic performance is forecast to worsen by 30% of them, up from 14% previously.

Also since that previous reading by IPSE, the chunk of contractors foreseeing less revenue is up (albeit only slightly), as is the chunk of them expecting fewer contracts to come their way.

These pressures might explain why, when IPSE asked in December for their three-month outlook, a fifth of the contractors were negative and a quarter were positive, equating to a balance of just 3.4%. The leftover majority said things would stay the same.

The body therefore expects a “plateau in freelancer performance” this year, which it points out is politically uncertain (due to the election) -- maybe another reason why the mood of its members has “moved from bullish to cautious.”

It added that 2015 also has the potential to become a 12-month period of consolidation, or even deterioration, as far as freelancers’ prospects and their view of the economy is concerned. It reflected:

“One view is that this positive confidence…although much reduced, is a good thing - suggesting these new higher revenues levels [£29,643] will be at least sustained over the next 12 months.

“On the other hand…any further reduction in business confidence for a 12-month outlook will actually push the [Freelancer Confidence] Index into negative values, indicating a fall in business performance.”

But the association’s research manager, Sunetta Johal, who compiled the findings, suggested that the ‘plateau’ outlook was the likely course for most freelancers in 2015. She explained:

“Confidence among freelancers has fallen and the general perception is the economy will perform only marginally better in 2015, although their own businesses will remain stable. [Indeed,] nearly half of the respondents expect there will be no change in revenue.”