According to a report released today by IPSE about one million UK-based freelancers have been pushed into debt since the pandemic hit.
IPSE is the Association of Independent Professionals and the Self-Employed. It is representative body for the UK’s self-employed community, including freelancers, contractors, consultants and independent professionals.
This research found that one in four (23%) freelancers have had to take on credit card debt to get by which equates to about 1.05 million people.
One in seven (14%) freelancers decided to use their overdrafts and more than a quarter (27%) have used up their savings.
One fifth (18%) claimed they will need to borrow money to pay their tax bill, while 47% of freelancers are saying that they have been putting money aside throughout the year to prepare for their next tax return.
UK’s freelancers faced serious challenges in the last six months including a significant fall in demand for freelance work and a steep decrease in average earnings (25% drop in Q2 2020).
Chloé Jepps, Head of Research at IPSE (the Association of Independent Professionals and the Self-Employed), said: “This research shows in detail the drastic and deeply concerning impact the coronavirus pandemic has had on freelancers’ finances. In particular, it shows how its effects are likely to last for years to come, as many freelancers have burned through their savings and turned to credit cards and borrowing to get by.
“The pandemic led work to dry up across the sector, and too few freelancers have accessed government support – often because they are excluded from it. The situation has been worsened by the increase in late payment – particularly for female freelancers. Before the pandemic, female freelancers were often in a less secure financial position than their male counterparts (in large part because of the gender pay gap). Now, poor payment practices are making the situation even worse, disproportionately affecting their finances and even mental health.
Anne Boden, CEO and Founder of Starling Bank said: “Self-employed people are the backbone of the British economy. These findings indicate how hard hit they have been by the pandemic, creating a real need for banks such as ours to continue to support them by offering competitive rates, competitive loans and money-saving services. Without these, they simply won’t survive.”
Check the full report here: https://www.starlingbank.com/news/one-million-self-employed-pushed-into-debt-due-to-pandemic/