News
Jessica Fino 9 Feb 2017 04:59pm

Sharing economy feeling regulatory pressure

The major sharing economy sectors in the UK are facing increasing pressure from regulators, according to PwC

The Big Four firm said the rate of growth in the sharing economy sectors has started to slow this year. Regulators are tightening up and better enforcing tax rules, and legal rulings in areas such as employment regulation are challenging existing business models, it added.

Regardless, the major sharing economy sectors in the UK could see their transactions rise by 60% or £8bn this year alone.

Despite pointing out that this rate of expansion was slower than in the last few years, the report said that the sharing economy would still be out-performing most other sectors of the economy.

By 2025, collaborative finance, peer-to-peer accommodation, peer-to-peer transportation, on-demand household services and on-demand professional services are expected to reach £140bn in transactions.

However, the report warned, “It has never been a riskier time to be a sharing economy platform.”

As a result, PwC expects these businesses will start proactively implementing self-regulation.

For example, Airbnb announced last year it would enforce a 90-day limit on Londoners renting their homes for short periods.

Rob Vaughan, economist at PwC, said, “Trust will continue to be the key sharing economy issue in 2017. To tackle this, we expect platforms to implement proactive new forms of self-regulation this year.

“The interaction between the sharing economy and the tax system is also set to move into the spotlight, as the implications of legal cases become clearer.”

PwC said it expects the UK’s sharing economy to grow 30% per year over the next decade, generating £18bn of revenue for platforms. It also expects other European countries to see their sharing economy marketplaces mature.

Looking ahead, the firm said that the collaborative finance sector will continue to grow at the same time as the UK establishes itself as a FinTech hub in Europe, with nearly £70bn of financing expected to flow through these platforms in the UK by 2025, up from £3bn in 2017.

Vaughan added, “Innovation will remain crucial to success in the sharing economy. A number of established players branched out into new service offerings in 2016 and we expect them to invest significantly in these this year.

“The success of these new services will be an acid test of whether sharing economy platforms can eventually become the established leaders of their markets, or will forever be known as the ‘disruptors’.”

PwC also said that Brexit is not expected to have a significant negative effect in growth this year, once activity is being driven by longer-term trends.

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