Short version
The economy is tanking. Unemployment is going up and will continue to rise as companies tighten their belts to weather this. The natural corollary of all this is that demand for contractors will shrink and put them in a weaker negotiating position.
This is the entire point of contracting. Remember all the arguments of "I'm more expensive than a permanent resource because I take the risk of unemployment"? Well here's the risk realised. Walk if it's so painful and you're confident of maintaining your day rate elsewhere.
I recall the bitching around IR35 (some companies, the one I'm in particularly implemented it despite the deadline moving) as a manager of a number of contractors and the threats to walk - every single one of them is still here 6 months later.
Biting the hand that feeds IT
