Contractor confidence looks particularly downbeat across the UK further to the ongoing uncertainty created by the mounting Brexit storm. As a whole contractors were hopeful that the situation would have be solved by the original March 29th deadline but that clearly didn’t transpire. The IPSE (the association of independent professionals and the self-employed) have outlined a downbeat outlook identified in a January to March 2019 contractor confidence index. The findings show that Brexit has now leaped over Regulation as the most pressing concern for contractors. The previous quarter’s findings in the index highlighted the only positive as the potential for Brexit to be resolved. This demonstrates how damaging the further delays really are to the contracting sector.
The full IPSE report behind the index states “This quarter was set to finish with us leaving the EU on March 29th.”
“However… now [there is] an extension in place that takes us up to the third quarter of the year. In one sense, that gives businesses more room to prepare for changes to the economic landscape. In another sense, however, it also drags out the uncertainty of Brexit.”
Brexit needs to be added together with other negatives measured in the index such as less available work and extra contracting costs. The combined effect of these is to significantly worsen the position for contractors compared to previous quarters. The financial figures back this up with a 17% fall in income resulting from a reduction in pay rates and the actual volume of work. Contractors holding management, directorship or senior positions were damaged particularly hard with plummeting daily pay rates.
However the actual confidence of contractors surveyed in the index is technically improving slightly on average although the ratings are still deeply negative. The outlook for the economy for the next 12 months has improved with an index rating of minus 38.5 compared to 48.1 previously. The outlook for contractors own businesses for the next 12 months improved to minus 6.1 compared to minus 9.1 previously. Finally the three month business outlook improved to minus 0.7 from minus 1.8 previously. However the overall ratings are still very poor and show a meaningful recovery is still not close in the mind of contractors.
The IPSE stated “It is unlikely that business confidence will return to pre-referendum levels until there is more clarity on the UK’s Brexit and broader economic position. In the past freelancers have been able to overpower these negative influences [Brexit, and Government regulations] by employing business strategies associated with reputation/brand building and innovation which have led to business growth.”
“Unfortunately, the current economic challenges are so sufficiently great that freelancers have been unable to beat trends to generate positive performance for their businesses.”
IPSE reflected: “Freelancers have demonstrated in the past their ability to thrive through their own business initiatives and therefore, if parliament can create a more conducive business environment, there is no reason to believe they wouldn’t be able to do that once again.”
Source: Contractor UK, Brexit battering UK contractor confidence, June 2019, https://www.contractoruk.com/news/0014118brexit_battering_uk_contractor_confidence.html