Britain topping western Europe’s self-employment league may be ‘sign of a weak economy’

Research by the Institute for Public Policy Research (IPPR) has revealed that Britain is becoming the main country for entrepreneurialism in Western Europe, with the number of self-employed growing by more than 1.5 million in the past 13 years.

There are now 4.5 million self-employed professionals, representing more than 15% of the UK’s labour force. Since 2010 two-fifths of all new jobs created have been among the self-employed.

UK growth outstripped that of France, Spain and Italy, where levels have stagnated, but was behind double-digit growth in parts of Eastern Europe, such as Slovenia, Bulgaria and Cyprus.

The growth has led to claims the trend for becoming your own boss may be evidence of a weaker economy.

Spencer Thompson, the IPPR’s senior economic analyst said there are “legitimate concerns whether a lot of the new self-employed are actually employees by another name”, with the Bank of England’s interest rate setting committee one of the bodies to have expressed the sentiment.

Shadow business secretary Chuka Umunna added that the Labour Party’s own analysis showed self-employed incomes have fallen by an average of £2,000 since 2010, which at 14% represents a bigger fall than the 9% experienced by those in regular employment.

Umunna said that while the flexibility of self-employment to aid work-life balance is an individual benefit and should be encouraged, those working on a freelance basis have been “hardest hit by the cost-of-living crisis” with many working part-time and paid a fraction of full-time workers.

However, the Professional Contractors Group (PCG), a prominent membership organisation for freelancers, contractors and independent professionals, said the IPPR’s report emphasises the importance of the self-employed to the UK economy.

PCG revealed that self-employed individuals contributed £95bn in 2013 – a number which is forecasted to increase.

The PCG also indicated key growth areas in entrepreneurialism, with more mothers and individuals under 30 becoming independent professionals – indicating that starting a business is becoming more wide-spread and that self-employment will continue to rise in the future.

PCG’s senior public affairs manager, Andy Chamberlain, commented on the IPPR findings:

“The fact that Britain is becoming the self-employment capital of Western Europe is hugely positive news. It’s important to remember that striking out alone doesn’t just benefit these individuals – the economy reaps huge rewards as well.

“Independent professionals are driving the economy forward and doing so in a way that boosts their quality of life as well as Britain’s economy. The vast majority of independent professionals choose self-employment because they want to take control of their own destiny and achieve a work/life balance that suits them and their families.”