As a contractor in the UK, I paid less tax than an employee would. HMRC brought in IR35 to try to combat that, but at the time I was contracting (early 2000's) most contractors were still paying less tax - I'm not sure if that's stricter these days.

I was in London working in web & finance at the time, so it was a fairly distorted market. I did get bitten by the dot com crash, but even so I was only out of work for about 6 months or so and that was a pretty extreme event. Realistically in the current environment job stability in a major IT centre like London is so good that contracting is pretty safe. In a more unstable market there would be a higher element of risk, for sure.