• Freelancer confidence in their own businesses has fallen for the fourth successive quarter
• Freelancers are also less confident in the wider economy for the next twelve months
• The state of the UK economy is still considered the greatest barrier to business performance

• Freelancers are now charging more, with average day rates for the last three months standing at £576

   

Despite increasing their average day rates, freelancers continue to report falling confidence in their own businesses for the next year – the fourth successive quarter where they have reported a decrease.

The sector was also pessimistic about the UK’s economic fortunes, with speculation surrounding the Budget undoubtedly impacting freelancers’ outlook. 

Concerningly, six in 10 freelancers are also now expecting their business costs to rise in the next year. The majority of the sector expects to absorb these costs, with just one in five forecasting an increase in their day rate in the next 12 months.

Freelancers’ confidence in their own businesses for the next three months has now decreased for a second successive quarter. In fact, confidence has decreased from -18.6 in Q2 2024 to -34.5 this quarter, following a decrease in confidence reported between Q1 2024 and Q2 2024 (decreasing from -13.2 in Q1 2024 to -18.6 in Q2 2024).

Freelancers’ confidence in their own businesses for the next three months has decreased for both SOC2 professional and SOC3 associate professional and technical freelancers.

SOC3 associate professional and technical freelancers reported the biggest decrease, falling from -4.4 in Q2 2024 to -34.1 in Q3 2024.

SOC2 professional freelancers also reported a fall in confidence, decreasing from -22.3 in Q2 2024 to -39.3 this quarter.

On the other hand, SOC1 managerial freelancers reported a small increase in their confidence, increasing from -35.9 in Q2 2024 to -28.0 in Q3 2024.

Looking at freelancers’ confidence for the next 12 months now reveals that freelancers are much less confident in their own businesses. Confidence has now decreased from -22.3 in Q2 2024 to -45.6 this quarter – the fourth successive quarter where freelancers have reported a decrease in their 12-month business confidence.

Much like three-month confidence, this is driven by sharp decreases in confidence to both SOC2 professional and SOC3 associate professional and technical freelancers, with confidence for these groups decreasing from -29.6 in Q2 2024 to -50.0 in Q3 2024 and from -5.4 in Q2 2024 to -50.0 this quarter respectively.

SOC1 managerial freelancers, however, reported a slight increase in their confidence for the next 12 months, with confidence increasing from -38.6 in Q2 2024 to -32.0 this quarter.

We now move on to explore the factors that freelancers identify as having an influence on their business performance. In terms of negative determinations, freelancers continue to cite the same three factors lowering their business performance in the same order.

Freelancers continue to cite state of the UK economy (85.5%) above government tax policy relating to freelancing (82.7%) as the first and second most detrimental factors impacting their business performance.

In third, freelancers cited government regulation relating to hiring freelancers, with 74.8 per cent of all freelancers reporting this as a factor that is lowering their business performance.

Turning to the positive influences on business performance, this quarter reveals that whilst all the negative factors were external, the factors enhancing freelancers’ business performance remain largely internal.

In line with our findings from last quarter, the top factor enhancing freelancers’ business performance remains unchanged this quarter. Brand value and reputation in the market continues to be the top factor positively influencing freelancers’ business performance, with 58.8 per cent citing this in this quarter.

Innovation in terms of better processes and operations was the second most positively enhancing factor for freelancers’ business performance this quarter, with 43.7 per cent citing this. Interestingly, this is the first time that this has factor has been cited in the top three positive factors since the launch of our Confidence Index back in 2014.

Innovation in terms of the services offered to clients is now the third most enhancing factor for freelancers’ business performance, with 43.1 per cent reporting this in Q3 2024.

Freelancers’ quarterly confidence in the UK economy for the next three months has decreased from Q2 2024, falling from -15.0 in Q2 2024 to -45.8 this quarter.

This is driven by sharp decreases in confidence reported by all three SOC groups.

SOC3 managerial freelancers reported the biggest decrease in confidence since Q2 2024, decreasing from -10.6 in Q2 2024 to -47.9 this quarter.

SOC2 professional freelancers also reported a decrease in their confidence, decreasing from -19.0 in Q2 2024 to -47.6 this quarter.

Similarly, SOC1 managerial freelancers indicated a sharp decrease, falling from -16.2 in Q2 2024 to -39.7 in Q3 2024.

Now looking at confidence in the UK economy for the next 12 months, freelancers are a lot less confident compared to Q2 2024. In fact, confidence has decreased from -15.6 in Q2 2024 to -46.1 this quarter.

This is driven by significant drops in confidence amongst all three SOC groups.

SOC1 managerial freelancers’ confidence has decreased from -20.3 in Q2 2024 to -51.7 in Q3 2024 whilst SOC2 professional freelancers also reported a decrease, falling from -19.3 in Q3 2024 to -49.4 this quarter.

SOC3 associate professional and technical freelancers’ confidence, likewise, has fallen from -9.2 in Q2 2024 to -39.6 in Q3 2024.

This quarter, the average day rate charged by freelancers over the last three months stands at £576, which represents an increase on our findings from Q2 2024 (£457).

Looking at the SOC groups more closely and comparing the findings to Q2 2024 reveals that all three SOC groups have increased their average day rates since last quarter.

SOC1 managerial freelancers reported the biggest increase, with their average day rates increasing from £457 in Q2 2024 to £704 this quarter.

Average day rates have also increased for SOC2 professional freelancers, increasing from £596 in Q2 2024 to £666 in Q3 2024.

Similarly, SOC3 associate professional and technical freelancers also reported an increase to their day rates, increasing from an average of £328 in Q2 2024 to £412 this quarter.

In terms of quantifying the expected change in day rates, 19 per cent of freelancers now expect an increase in their average day rates for the next 12 months (down from Q2 2024, where 27 per cent expected an increase).

When asked to quantify the expected change to their day rates, freelancers expect their day rates to increase by 12.2 per cent in the next 12 months.

Freelancers’ spare capacity has remained relatively stable since Q2 2024, decreasing only slightly from 3.5 weeks without work per quarter in Q2 2024 to 3.4 weeks this quarter, meaning freelancers are now working slightly more.

This small decrease in freelancers’ spare capacity is driven by a decrease in the spare capacity of SOC3 associate professional and technical freelancers, decreasing from 3.7 weeks in Q2 2024 to 3.4 weeks this quarter.

On the other hand, SOC1 managerial freelancers reported small increase, increasing from 3.6 weeks in Q2 2024 to 3.7 weeks in Q3 2024 whilst SOC2 professional freelancers reported no change in their spare capacity (3.2 weeks without work).

This quarter, average quarterly earnings over the last three months stands at £25,594, which represents a significant increase on our findings from Q2 2024 (£21,591).

This is driven by all three SOC groups reporting an increase in their average quarterly earnings compared to last quarter.

SOC1 managerial freelancers reported the biggest increase to their average quarterly earnings, increasing from £20,341 in Q2 2024 to £27,147 this quarter.

SOC2 professional freelancers also reported an increase in their average quarterly earnings, increasing from £29,145 in Q2 2024 to £31,732 in Q3 2024.

Finally, SOC3 associate professional and technical freelancers also reported an increase compared to last quarter, increasing from £15,365 in Q2 2024 to £18,929 this quarter.

Six in 10 freelancers (60%) now expect their input costs to increase over the next 12 months.

A further 33 per cent of freelancers forecast no change in their input costs for the next 12 months. Interestingly, just one per cent of freelancers could foresee a decrease in their business costs for the next 12 months, whilst seven per cent were unsure.

In terms of quantifying the expected change in input costs for the next 12 months, freelancers now predict that their input costs will increase by 8.6 per cent.

The percentage of freelancers incurring business debt has increased slightly since Q2 2024, with 32 per cent of freelancers now incurring business debt this quarter compared to 30 per cent in Q2 2024.

The percentage of freelancers incurring business debt via credit cards remains the same as in Q2 2024, with this figure at 17 per cent.

Similarly, nine per cent of freelancers now report that they have business loans from a commercial bank.

This quarter, job-related stress levels have increased slightly from 5.92 in Q2 2024 to 6.26 this quarter (on a 10-point scale where zero is not at all stressed and 10 is extremely stressed). 

This is driven by increases to all three SOC groups.

SOC1 managerial freelancers reported an increase in their job-related stress, increasing from 5.65 in Q2 2024 to 5.84 in Q3 2024 whilst SOC2 professional freelancers increased from 6.26 in Q2 2024 to 6.57 this quarter.

SOC3 associate professional and technical freelancers, likewise, reported an increase in their job-related stress from 5.78 in Q2 2024 to 6.23 in Q3 2024.

Job satisfaction has increased slightly since last quarter, increasing 5.87 in Q2 2024 to 6.05 this quarter (on a 10-point scale where zero is not at all satisfied and 10 is extremely satisfied).

SOC1 managerial freelancers reported an increase in their job satisfaction, increasing from 6.03 in Q2 2024 to 6.84 in Q3 2024 whilst SOC2 professional freelancers also reported an increase, increasing rom 5.94 in Q2 2024 to 6.06 this quarter.

On the other hand, SOC3 associate professional and technical freelancers reported a decrease in their job satisfaction, falling from 5.95 in Q2 2024 to 5.55 in Q3 2024.

The sector remains deeply pessimistic about the UK’s economic fortunes, with the sector concerned about rising business costs amid speculation surrounding the Budget and the potential impact of any tax rises.

This is also now translating into freelancers being less confident in their own businesses, with confidence now falling for the fourth successive quarter in a row.

It will be interesting to track how the measures announced at the Budget will impact freelancers’ confidence in both their own businesses and the wider economy in our Q4 survey of the sector.