NEARLY half of large businesses are likely to make redundancies, new data shows, as experts warn it is “disastrous” news and pushing workers into self-employment.
New Advisory, Conciliation and Arbitration Service (ACAS) data shows that 46% of large businesses are likely to make redundancies and 21% small and medium-sized businesses are looking to do the same, before the end of the year.
But with unemployment already over 5%, where will those looking for work go next?
Research from Leapers, which supports the mental health of the self-employed, shows a dramatic increase in the number of people who feel they had “little other choice” but to turn to self-employment.
The number of people who felt they had “little other choice”, has almost doubled in the past two years – 29.7% of those who joined self-employment in 2025, compared to only 15.7% for those who started freelancing more than prior to 2023 – with dramatic impact.
A total of 48.1% of those pushed into self-employment, reported struggling with poor mental health.
Freelancers face increased competition from more people entering self-employment, a challenging commercial landscape, and of course a lack of sick pay, paid time off or colleagues to call upon.
Finding yourself in freelancing without a plan can be overwhelming
Matthew Knight, Chief Freelance Officer at Freelancing.Support, said this can be challenging for accidental freelancers.
He added: “Finding yourself in freelancing without a plan can be overwhelming. There’s already a steep learning curve, but if you’ve not had time to prepare, don’t have emergency savings, and don’t want to work in this way – it’s going to be even more challenging, if you feel forced into it.
“Even those employees who aren’t planning on going self-employed, people might need to start planning for what a future of freelancing could look like for them: building a network of potential clients, putting cash away for a rainy day, finding resources on how to get started, or even thinking about starting a side hustle to learn the ropes.”
Michelle Lawson, Director at Fareham-based Lawson Financial, said the government will need to pay more on benefits.
She added: “This is such woeful news and disastrous for a government claiming they are creating growth when in reality it’s the opposite. The only growth is the public’s anger at Labour, the national debt and unemployment along with many other things.
“Making it expensive to hire and run a business isn’t how to get growth – if only the top ministers had run a business before they would know this but they haven’t. Unemployment will push up the benefit spend, some will divert into other types of employment but they will be in the same cycle. Self-employment comes with its own risks and costs and isn’t for everyone.”
The only growth is the public’s anger at Labour
Colette Mason, AI Ethics Consultant at London-based Clever Clogs AI, said freelancing can be mentally tough.
She added: “Half of those pushed into self-employment report poor mental health, and it’s clear why. Freelancing without pricing skills, a client network, and a head for sales and marketing isn’t a career pivot, it is a dead end. Competing on cost in a market already being squeezed by AI tools promising clients they don’t need to hire anyone at all hurts.
“Existing freelancers will consider undercutting on price to survive. The floor drops from both directions: more supply entering at the bottom, and automation compressing what clients will pay at the top. Calling it ‘the freelance life’ doesn’t make it a free one, truly worth living. Redundancies will push more people into self-employment.
“Will anyone, the government, industry bodies, employers running those redundancy programmes, build the financial, commercial, and psychological infrastructure to stop forced self-employment becoming a second redundancy in slow motion. After years of small business tax grabs, I doubt it.”
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, warned that freelancers do not get sick pay or paid holiday.
She added: “More redundancies will push some people into self-employment, but we need to be honest about the difference between choosing freelance life and being pushed into it because the job market has closed doors. Self-employment can be brilliant, but it is not a soft landing.
“There is no sick pay, no paid holiday, no guaranteed income, no HR department and no team carrying the weight with you. People need to prepare before they are forced into it: build emergency savings, understand tax, separate business and personal money, keep records from day one and work out how they will actually win clients. For existing freelancers, this is mixed news.
“More people entering the market can create energy and collaboration, but it also means more competition, downward pressure on prices and clients expecting more for less. The danger is that unemployment does not create entrepreneurs. It creates people trying to survive without a safety net.”
Freelancing is becoming a necessity rather than a choice
Paul Denley, CEO at London-based Oakham Wealth Management, said freelancing was becoming “more of an economic coping mechanism”.
He added: “When self-employment becomes a last resort rather than a choice, something shifts. Research shows that nearly half of those pushed into freelancing report poor mental health.
“For employees, the best preparation is a financial buffer, strong professional networks and transferable skills. In a weaker jobs market, adaptability is no longer a nice-to-have; it is a necessity.
“For existing freelancers, the picture is mixed. More businesses may use contractors to retain flexibility, creating opportunities. But an influx of newly self-employed workers is also likely to increase competition and put pressure on rates.
“Freelancing offers freedom, but it also transfers economic risk from employers to individuals. For many, it is becoming less of a career choice and more of an economic coping mechanism.”
Harry Goodliffe, Director at Winchester-based HTG Mortgages, said people worried about freelancing should start building their network already.
He added: “For many workers, freelancing is becoming a necessity rather than a choice. When redundancies rise, more people inevitably look at self-employment as a way to generate income.
“The challenge is that freelancing isn’t just freedom and flexibility, it’s also uncertainty, inconsistent income and strong competition. Anyone worried about redundancy should start building their network, brand and emergency savings now, before they need them.”
