Contractors defy odds with brightest outlook since 2015

Contractors have picked themselves up from a record low in confidence and dusted themselves off to, somehow, display their brightest outlook since before the Brexit vote.  

Struggling to explain the sheer strength of the bounce back, contractor body IPSE said the faith one-person consultancies have in themselves has leapt from --14.3 last year to 5.3 today.

Although small-sounding, the current score represents the highest confidence reading since Q4 2015. More remarkably, it comes at a time when the odds are stacked against contractors.

So not only do threats like Brexit and IR35 reform loom large, but rates are also down (from Q1’s £430 to £394), and the costs of contracting are up -- predicted to leap by an average of 13.7%.

This squeeze is foreseen to have fiscal implications, so the confidence score for the economy by the contractors – whose quarterly earnings were down 22% -- is an “extremely low” --33.1

Research head at the Association of Independent Professionals and the Self-Employed (IPSE), Suneeta Johal, added: “Resilience and determination is doubtless a key factor behind [contractors’ confidence]”.

“Against all odds,” she said, “they now have the highest confidence outlook for their business level since before the EU referendum…[despite] the negative forces ranged against the self-employed right now.”

Unifying those forces are government policies, “and in descending hierarchical order [they] are; the commitment to Brexit, taxation policies relating to freelancers and the regulation of the freelance sector,” IPSE wrote.

In a report on the findings, it added: “Regardless of whether freelancers’ increase in business confidence is justified or not, all the data…points towards [a] very tough business environment over the next 12 months”.

Professor Andrew Burke, dean of the Trinity Business School said: “The mindset [of contractors] can’t just be about surviving or ‘keep calm and carry on’”.

“Because the changes to the sector over the next 12 months could be revolutionary. This time next year freelancers could find themselves in any number of scenarios.”

An unfinalised Brexit deal, and an outstanding official response to the IR35 reform consultation are the uncertain beginnings of those scenarios.  

“Freelancers from managerial, professional and associate professional and technical occupations should….prepare a portfolio of strategies to sustain their businesses through the range of scenarios that could arise,” Prof Burke advised.

“In the meantime,” reflected IPSE, envisioning a future point of certainty for its members, “freelancers will do what they have found to enhance their business performance in the past”.

“And that is to adopt strategies and practices which build their own brand and reputation, create new and better services for their clients and find new and existing markets with business opportunities for freelancers.”

According to the Q2 findings, the value of brand and reputation is still the top positive factor affecting the freelance sector as a whole, followed by innovation in terms of service.

“Freelancers, by their very nature, are optimists and problem-solvers,” said the founder of Xenios Thrasyvoulou. “The fact that they’re able to find positivity in the face of relatively dismal…[scenarios] perhaps shouldn’t surprise us.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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