04 May 2016

Financial Times: Brexit blamed for surge in uncertainty

Economic uncertainty has hit its highest level in Britain in at least 19 years in the lead-up to the EU referendum, according to an influential index compiled by Stanford University.

Surveys for April showed the weakest level of manufacturing activity since the eurozone crisis in early 2013 as companies fret about global risks and the domestic impact a Brexit vote may have.

The academics at Stanford in California attribute the slowdown directly to concerns about a British exit from the bloc.

With measured uncertainty in Britain this spring higher than at the time of the September 11 terrorist attacks, the collapse of Northern Rock, the global financial crisis, the eurozone crisis and the Scottish independence referendum, Professor Nicholas Bloom said the referendum “appears to be generating an extraordinary level of economic policy uncertainty”.

The Bank of England has said it is increasingly concerned that companies are reacting to the uncertainty by putting business decisions on hold.

Only the UK index shows a spike in the past two months, with the equivalent indices for the US, France, Germany, Spain and Italy at relatively normal or low levels.

Full article on Financial Times (subscription required)

Economic Policy Uncertainty index

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