10 March 2016 | Graeme Davies
A day doesn't go by in the NHS when I'm not being contacted by cost-savings consultants who promise a wave of new initiatives that I haven't previously thought about.
After the phoney war of recent months, suddenly the UK electorate has to take the Brexit question seriously. David Cameron returned from negotiations with his European peers last month with a plan to reshape the UK's role in the European Union, which will be put before the electorate in June.
But it was the entry of London mayor Boris Johnson on the side of the leave campaign that really lit the blue touchpaper. Not only did it bring into sharp relief the divisions running through the Conservative Party over the issue of Europe, it also gives the leave campaign a figurehead around which to rally and reach out to the electorate more effectively than the likes of Nigel Farage.
Financial markets took the threat of a Brexit badly. As is typical when any uncertainty of this scale emerges around an economy, the pound was hit first, sinking to its lowest level against the dollar since the early days of recovery from the financial crisis.
Strategists at HSBC reckon the pound could fall up to 20 per cent against the dollar in the event of a Brexit with a similar fall potentially bringing it to parity against the euro. They also suspect a hit of up to 1.5 per cent to GDP from the effect of the pound's slide, a resultant leap in inflation and heightened uncertainty hitting business investment.
But more sober analysts are preaching calm over the outcome. Star fund manager Neil Woodford commissioned analysis from think tank Capital Economics, which concluded that the pound will weaken in the event of a Brexit, but over time this would be a boon to exporters. Furthermore, although the UK may withdraw from the EU it would retain its current trading relationship while a new one is negotiated, and a deal similar to those enjoyed by the likes of Norway and Switzerland could be agreed. On the subject of regulation and red tape, although some could be discarded, it is debatable just how much British businesses would want to sweep away, and how much they would be allowed to get rid of if they still wanted to trade into the EU.
But Capital Economics did identify concerns over the impact on the City of London and its commercial property market. Although London survived the advent of the euro with great success, a significant proportion of its business is done with Europe, often through firms who establish themselves in London and use EU 'passporting' rules to then sell financial services into the EU. A Brexit could threaten this sizeable constituency's future in London.
Capital Economics highlighted the particular threat this could pose to sectors that support London's dominant financial sector such as commercial property and professional services as well as the FM companies that serve them. There is added potential for pain here in the fact that the construction sector is heading into a peak building phase. In what could turn out to be a classic property cycle downturn, a flood of new commercial and, indeed, residential property is set to come on to the London market in the next five years and this could coincide with a sudden drop in demand. Capital Economics predicts that this could result in a rapid retraction in rent yields and property values falling by up to 15 per cent. Such is the dominance of London on our economy that, should it catch a cold, the rest of the UK will shiver.
Graeme Davies writes for Investors Chronicle