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One in three UK freelancers don’t feel confident about their long-term future due to IR35 and economic uncertainties

  • Only 53% of UK freelancers aren’t considering a full-time job, with 35% thinking about it;
  • 51% of UK freelancers have an impression of business opportunities’ slowdown;
  • Yet only half of full-time UK freelancers (48%) could raise their daily rates to align with the inflation.

London, UK, 1 May 2024: Freelancing in the UK took a hit due to IR35 changes and economic instability, as 35% of UK freelancers don’t feel confident about their long-term future, according to Europe’s largest talent marketplace, Malt.

In its latest ‘Freelancing in Europe 2024’ report,  the number of UK freelancers who are confident is lower than the overall European average (69%), especially compared to countries like Germany (86%) and France (75%).

As a result, only half (53%) of freelancers are not looking for a full-time job, with 12% actively searching for it and 35% thinking about it. This is a big contrast to other countries such as Germany, Belgium, and the Netherlands, where freelancers are much more confident in their career choices, with 72%, 71%, and 70%, respectively, not looking for full-time employment.

The UK is also one of the most impacted countries when it comes to business opportunities – more than half (51%) of UK freelancers have an impression of a slowdown due to the economic environment. Compared to other European countries, freelancers feel that they have more or the same business opportunities, with only 32% in France, 32% in Germany and 39% in Spain feeling a slowdown.

The situation is exacerbated with the rollout of IR35 – some companies, especially in financial services, have banned freelancers entirely, while others try to avoid UK freelancers and prefer to work with European ones to avoid adhering to IR35 rules.

Quentin Debavelaere, General Manager for UK, Benelux and Middle East at Malt, said: “Economic uncertainties and especially legislations like IR35 are the main pressure points for freelancers in the UK. Many organisations have slowed down their investments by reducing marketing spend and focusing on core business activities. This resulted in a big slump in the demand for advertising and consulting services, in stark contrast with 2021 and 2022. For freelancers, this means lower opportunities for the creative class and management consultants.

“Yet, it’s not all doom and gloom for the UK freelancers. Some organisations see an independent workforce as a formidable lever of flexibility. Several companies will definitely aim for having 15-20% of a flexible workforce in the future to cope with increased volatility.”

To combat high inflation rates, nearly half of full-time UK freelancers (48%) raised their daily rates to align with inflation. The proportion of part-time UK freelancers who raised their fees is even lower – 43% – probably due to fear of jeopardising a valuable supplemental income source. This is a stark contrast to Spanish freelancers – 75% increased their rates dramatically due to inflation.

Despite the current economic uncertainties, UK part-time freelancers are faring much better – 53% want to do more independent work, and 35% want to continue to do independent consulting part-time. This might be partially due to the fact that many UK part-time freelancers are waiting for the economic turbulence to settle before leaping into full-time freelancing opportunities.

Zooming in on UK freelancers in specific industries, confidence in freelancing as a long-term future is high across industries such as Business Consulting (77%), Tech and data (77%), and Art and design (71%).

“Freelancers offer a competitive advantage in the marketplace primarily due to their ability to deliver services with lower overhead costs and greater flexibility compared to traditional outsourcing companies. This efficiency enables them to provide high-quality services at exceptional value, making them an attractive option for clients, especially during periods when many companies are reducing their budgets.

“While the economic turbulence and IR35 might be mudding the waters, freelancing will continue to thrive across Europe. It’s not considered a side hustle anymore but rather a conscious lifestyle choice, especially for younger generations who value flexibility above all else. Moreover, large organisations like L’Oreal, Schneider Electric, BT and WPP are finally seeing independent talent as valuable members of their ‘superteams’, bringing enormous value to their operations.

“We at Malt are very proud to not only be the conduit of independent talent for companies but also the cornerstone of the fantastic freelancing community, and we look forward to growing our support in 2024”, concluded Debavelaere.

To find out more about the current freelancing environment across Europe and see how the UK fares against its European counterparts, download the report here.