The number of self-employed people in the UK will surpass that of public sector workers within the next four years, fired by huge growth in micro-firms and contractors.

There are 550,000 more micro-businesses – those employing fewer than 10 people – than there were in 2008.

Research by think tank RSA and etail business Etsy.com shows that this rate of growth, coupled with shrinking public sector jobs, means there will be more self-employed than public sector workers by 2018.

Micro-businesses account for 95 per cent of private sector firms and 32 per cent of private sector jobs.

Factors driving the transformation include a new working culture, new demographics and emerging market sectors and cutting-edge technology, said RSA.