As the Brexit confusion continues, what happens next is anyone’s guess, with the only certainty being continued uncertainty for the foreseeable future. The effects of any deal or ‘no deal’ exit from the EU would be far reaching, with the impact felt across all areas of the Nation’s policy. However, the immediate concern for many contractors is how Brexit will affect their livelihood. With changing employment laws, immigration rules and Britain’s single market status on the line, there’s a lot at stake for contractors. Umbrella Exchange considers the main pros and cons of Brexit for the UK’s contracting sector.
Positive implications of Brexit for UK contractors
It’s a well-established fact that contractors thrive in uncertain market conditions. The scalable, flexible and cost-effective nature of contracting gives businesses the agility to respond to market fluctuations; up-scaling or downscaling their workforce to meet demand without a continuous drain on finances. The widespread uncertainty surrounding Brexit looks set to continue for the foreseeable future, and this means that business are more likely to turn to contractors, rather than hiring full time employees, while they wait to see the direction Brexit will take.
In addition to this, many businesses are likely to require consultancy in dealing with the coming changes and in handling areas that previously fell under EU legislation. There has already been a boom in demand for legal services and there will be similar demand for IT and finance contactors as many businesses adjust their infrastructures to accommodate change.
Should the value of the pound continue to fall against the dollar and euro, this could bring its own opportunities. A falling currency may attract international clients, whose purchasing power will increase, creating possible opportunities for contractors.
Exit negotiations are also likely to lead to significant changes in employment rights and Agency Workers Regulations, which may free up smaller businesses to hire more contractors. Matthew Taylor’s report on modern working practices in the UK has thrown recent focus on the employment rights of independents, as has strong media coverage of the controversial off-payroll rules, making this an area that contractors should closely follow.
Many politicians and business owners claim that by leaving the EU and dispensing with several of its regulations, the UK will become more economically competitive. Additionally, many European contractors who work in the UK are already looking to establish work elsewhere because of the uncertainly surrounding the British market. This could create a skills shortage in the UK, which would mean more available work for contractors who are permanently based in Britain, along with an upturn in rates.
Negative implications of Brexit for UK contractors
Although there is an agreement in place that ensures workers from EU countries will still enjoy the same rights until 2020, considerable uncertainly remains on how Brexit will impact on the free movement of people in and out of the UK and Europe. A departure from the single market would mean a probable end to free movement for the 45,000 UK contractors currently working in Europe, who would need work permits and visas to continue to work in the EU. The additional cost and administrative hurdles could make UK contractors less attractive prospects for businesses located in countries such as France and Germany, as it will be simpler for them to use EU contractors. Complex questions surrounding tax and VAT liability could also create difficulties for UK contractors working in the EU, as would any changes to the mutual recognition of professional qualifications that currently applies to EU members, alongside potential increases in travel costs to and from an independent UK.
The current uncertainly means that businesses don’t know if they’re going to be in the single market or not. It’s also unknown which deals will be made between the UK and Europe and how they will impact tariffs on goods and services. This could see large multinationals leaving Britain and relocating some or all of their operations to a neighboring EU country.
Summary of the Brexit effect
The effect of Brexit on UK contractors will largely depend on the results of the exit negotiations and what kind of a deal, if any, can be struck by the UK government. This leaves most contractors ‘up in the air’ and it’s unlikely that there will be any rapid answers. In the long term, it seems likely that Brexit could bring both benefits and opportunities for UK contractors. The best way forward for contractors is to ensure that they safeguard their careers by ensuring that their skills remain competitive, relevant and adaptable in an ever changing market.
To talk to a member of our team about your contracting options, call 0203 393 3881.
