“But there are difficulties associated with continuing EU membership – the regulatory burden and a possible transactions tax – and the City might prove resilient.
“London was a vibrant international trading, banking and insurance centre long before the industrial revolution – it provided a vigorous home market and plentiful supplies of raw materials for that revolution. The empire that fostered its growth is long gone, but substantial competitive strengths remain.”
The currency issue is one that remains important, if not central, to the debate, but is a topic which promises to keep economists busy for the next few months at least.
For Richard Champion and Justin Oliver, deputy chief investment officers at Canaccord Genuity Wealth Management, the external value of sterling is likely to face considerable pressure in the event of a vote to leave the EU.
“This potential weakness would likely be reinforced by Britain’s already deteriorating trade balance, as the contribution from so-called ‘invisibles’ has progressively dried up over recent years,” they said in their latest update.
“Furthermore, since its depreciation of almost 30% during the global financial crisis of 2008-09, trade weighted sterling has now rallied by more than a quarter; according to recent numbers form the OECD, sterling is 10% overvalued on a constant currency purchasing power parity basis.”
