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These economic experts are getting seriously worried about Brexit

May 4, 2016, 14:42 IST

Britain's Jody Cundy reacts after being given a DNF (Did not Finish) by judges in Men's Individual C4-5 1km Cycling Time Trial final on the second day of the London 2012 Paralympic games in the Velodrome at the Olympic Park in Stratford, London August 31, 2012. Cundy had appealed for a second attempt as his rear wheel slipped leaving the starting gate but the judges ruled that the fault lay with him.REUTERS/Eddie Keogh

Economic uncertainty hit its highest point in 19 years during March thanks to the upcoming EU referendum, according to the academic group behind the Economic Policy Uncertainty Index.

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"The upcoming Brexit referendum appears to be generating an extraordinary level of economic policy uncertainty," Professor Nicholas Bloom of Stanford University said, speaking to the Financial Times.

"We think Brexit-related uncertainty is having a material negative effect on UK economic performance," he added.

"This Brexit-induced slowdown is partly driven by firms pausing new investment and hiring projects until the future status of the UK is clear."

March figures in the Uncertainty Index are the highest since it began, and only the eurozone crisis of 2011-13 beats April's figures.

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For March the index reached 475.56, while in April it was 339. To put those numbers in context, the index usually hovers around 180-220.

According to its website, the index looks at newspaper coverage of policy-related economic uncertainty, tax code provisions set to expire in future years and general disagreement among economic forecasters to come up with the figures.

These findings come as UK manufacturing contracted for the first time in three years. On Tuesday, Markit's Purchasing Managers Index level was at 49.2 in April, compared to 50.7 in March - anything below 50 signals a reduction in activity. A release alongside that data suggested that "the upcoming EU referendum had led some clients to delay spending," hurting the sector.

Increasing numbers of major organisations - including the Bank of England - have warned about the dangers of Brexit, and last week BoE Governor Mark Carney said that the fears around the referendum "are the biggest risks facing the UK economy."

Polling suggests that remain voters have the edge over the leave campaign in the Brexit referendum - taking place on June 23 - but it's still very close, with only a percentage point between both camps.

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