Ambition, the international finance and accounting recruiter, believes that contractor accountants and finance staff working in the public sector will be badly hit by cuts in public spending.

There are currently around 140,000 permanent employees, freelancers and contractors in the public sector and Ambition predicts that around 11.5% will lose their jobs and many of those will be unable to find work in the private sector.

In total, it is thought that as many as three quarters of a million jobs will be lost in the coalition’s bid to reduce public spending by £6.2bn this year.

The MD of Ambition in the UK, Tim Gilbert, pointed out that the majority of public sector finance professionals do not have the cut and thrust attitude required by the banks and City financial institutions. Those candidates with commercial acumen will be quickly snapped up but many will fall by the wayside.

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Image: au chômage / unemployed by OliBac

The recession has inspired more of us to become self-employed according to Kensington Mortgages.

They recently published a study that found that just under 25% of the self-employed have been so for under 2 years. This equates to 1.2 million people changing their employment status since March 2008. And half of them became self-employed within the last year. The report also shows that the UK now has 5 million freelancers, contractors and temporary workers.

But unnecessary taxes and a lack of available bank support is hampering opportunities.

Rhiannon Davis from Shelter Offshore believes that businesses could get more support if they moved abroad. She said that UK law is restrictive and taxation excessive citing Class 4 National Insurance Contributions as an example. Effectively, they are a tax on tax, she said.

It seems some of us agree with her as 24% of the self-employed are thinking of setting up abroad according to a recent survey by foreign Direct Currency.

The outcome of the General election is still unsure but should the Conservatives form the next government, contracting may become even more attractive. The PCG expects the Tories to review IR35 which has been seen as a major factor in putting people off becoming freelancers.

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Never has the old Chinese curse seemed so relevant!

There was an interesting article on Radio 4 the other day as I was driving from the airport to work. It took the average UK family’s net income of £20,500 and used that to illustrate what the nation’s finances would look like on that scale. It turns out that the family would be borrowing £6,500 a year on top. That’s borrowing to spend on the weekly shopping, mind you, not borrowing to buy cars and houses and plasma screens. Worrying, isn’t it…

Then they looked at the various plans to cut that borrowing. The best case, apparently, would reduce it by around £250, leaving £6250. Not exactly encouraging.

So what would this mean for us freelances? Well if I knew that I’d be a rich man, but the obvious conclusion is that public sector spending will need to come down with a bit of a bump. That’s bad news if your contract is in the Public Sector, since the knee-jerk reaction of accountants everywhere is to ditch the agency workers first.

But it’s worse than that…

It means there are fewer jobs available for the freelance to apply for in the public sector, so they’ll have to look elsewhere. The problem is the market these days is so polarised into market verticals, that agents are usually incapable of putting people forward for a role if they aren’t already working in that vertical. So all the ex-public sector people become instantly unemployable.

And there’s more…

Also likely to be removed from full time employment are a raft of middle managers and back office workers. They’ll have to go somewhere, so there will be even more job seekers out there trying to grab whatever work is available.

And finally…

If the markets don’t like the new Government and their spending plans, then the stagnation in new business development will continue and contracts will become even scarcer. On the other hand they may see the new Government as the equivalent of the Second Coming and all of a sudden everything goes rocketing away. That would be nice, only I have the nasty feeling that the agencies are not so used to dealing with commoditised contractors that they will have to re-learn how to deal with a market where demand exceeds supply; after all, they haven’t had to for at least five years.

End result? Who knows; either there are fewer jobs to spread around more people and rates will be forced down for those in work, or there will be more jobs but proportionately more people going for them, meaning rates will be forced down…

Looks like an interesting – and slightly worrying- few weeks coming up.

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Image: Worries by privatenobby