Forget the Grexit, the Spexit, or any other possible exits from the euro. There's another one the City should be focusing on right now: the Brixit a British departure from the European Union.
The British started arguing about whether we made the right decision in joining the EU as soon as the then prime minister, Edward Heath, signed the treaty taking us in back in 1972. We have been arguing about it ever since, with not much sign of anything changing. Yet an exit is now on the agenda. But one question is rarely asked. If we did pull out, would Britain be a better or worse place to invest?
The European question is changing fast. A decade ago it was just a few cranks who argued that Britain should quit the EU. But three things have changed. First, the Conservative Party has become broadly eurosceptic. Most of its MPs and many cabinet members would like to see Britain pull out. Second, if the euro is to survive, there will have to be a full-blown fiscal union and it will have to be created fast.
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Tax and spending decisions will be made by a treasury minister based in Brussels. Members will have to give up control over their national economies. Indeed, in the peripheral countries they already have. Britain certainly won't want to be part of that. So, shortly we may effectively have left anyway, in the sense that we're no longer involved in the EU's most important decisions.
Finally, the world has moved on. In a global economy dominated by the rising powers of China and India and the rest of the emerging economies, the slow-growth, crisis-wracked EU doesn't look like a partner anyone would want to be married to any more. No one is going to be too worried about drifting away from an EU that seems stuck in permanent recession.
The EU budget summit later this month may provoke a showdown. Britain wants to cut the EU's spending, a proposal likely to go down about as well as a Shostakovich string quartet on The X Factor. It could lead to a quick referendum on UK membership of the EU. Even if it doesn't, a referendum seems certain in the next five years. The Labour Party is committed to one and the Tories won't want to be trumped in euroscepticism by Ed Miliband. When it happens, as it certainly will, the vote may well be to leave.
The markets would probably take fright at that. Sterling might tank. The FTSE would dive. Most mainstream business opinion for 30 years has been that Britain needs to be in the EU. It needs access to that market lose it and much of our trade would collapse. But on a medium-term view, it will be the right time to buy British assets.
True, there would be some hard questions to answer. The City would suffer. It's been the key financial market for the EU, but it's unlikely France and Germany would tolerate that if Britain was no longer part of the club. Global banks would have to move a lot of their operations to Frankfurt or Paris. The wealth they generate would be lost, although, as the mass redundancies at the London office of Swiss bank UBS demonstrate, that is less of a worry than it would have been a decade ago.
Also, while Britain could almost certainly negotiate the same kind of free access to EU markets that the Swiss enjoy, many hidden barriers to our exports might suddenly be thrown up. While the importance of exports to the EU is often exaggerated (only about 13% of the economy consists of selling it stuff), some businesses would suffer.
But set against that there would be two big advantages. First, sterling would strengthen. The pound is already emerging as a partial reserve currency a status it hasn't held for 50 years. The Swiss have increased their holdings of sterling dramatically. The Swiss National Bank last week revealed it had doubled its holdings of sterling while cutting back on euros. The Russian central bank recently revealed that 9% of its reserves were held in sterling. It's not hard to figure out why.
Despite all Britain's problems, it is still a stable nation and it is not caught up in the eurozone mess. If it was even further detached from the EU and the euro crisis, its attractiveness would only increase. The pound would be stronger and borrowing in this country would get cheaper as foreign money poured in.
Second, Britain could expect a one-off competitiveness boost from exiting the EU. While it may have started as a free trade zone, the EU has turned into a spending and regulating machine. Its agricultural policies keep food prices high.
Its employment regulations make it hard to fire people and companies reluctant to hire. Health and safety laws put barriers in the way of innovation. Rip those away and businesses would be freed of a massive burden. That would help Britain grow again, which in turn would help the equity markets.
There are not many reasons to be optimistic about the British economy. State spending is too high, taxes keep going up to pay for it, and growth has been flat-lining for four years with little sign of a sustained upturn on the horizon. But an exit from the EU might be the one thing that would put some fuel in the tank and get the economy moving again.
