On 23 June, the UK will hold a referendum on whether to remain a member of the European Union, which it joined in 1973.  Recent polls have shown support for the ‘leave’ campaign closing the gap with ‘remain’, and in some cases even coming out ahead.  It is clear that the vote will be a close one, and the number of ‘undecided’ voters is still high.

Expect financial market volatility in the short term

The pound has already weakened around 10% since June 2015, and if the UK votes to leave then sterling will almost certainly head a lot lower. How low could it go? GBP fell as low as 1.0370/USD back in 1985 on an oil price shock (at the time, oil was a key export) but most estimates put GBP at 1.20-1.30/USD in the event of ‘Brexit’. A weak pound, if sustained, could push UK inflation higher but it could also present a window of opportunity for non-residents and expats to purchase assets in the UK at a substantial discount.

There will likely be a ‘flight to quality’ in the event of a vote for ‘Brexit’ with gold, US Treasuries, and the Japanese yen expected to benefit from risk aversion. A vote for the UK to leave the European Union would also likely be negative for the Euro, as it would open the door to other member states considering the possibility of leaving, undermining the very foundations of the EU.

The Bank of England has contingency plans in place to extra liquidity to UK banks before and after the referendum, if needed.  A Brexit vote, and the consequences for global financial markets, could also lead to a delay in the US Fed’s next rate hike or even result in the Fed staying on hold for the rest of this year.

[Related: Investing in the UK: How would new tax rules affect you?]

Longer term consequences are less easy to predict

Of course there are much wider and longer-term implications for the UK and the EU economies, and indeed the rest of the world. UK growth may slow further if European companies move their HQs back to the continent, and inward investment is deterred by uncertainty. But a weak pound could boost exports, offsetting some of this.  A new framework for trade, border controls and a host of other issues would need to be renegotiated.  But there is time – up to two years – to figure out the practicalities of the UK’s separation from the EU.

[Related: Investing in UK property]

Being part of a large single market has undoubtedly benefitted the UK’s economy, but there have also been costs in terms of meeting EU regulations and standards.  If the UK chose to leave the EU, it would still be able to trade with the EU under WTO rules until such time as a new trade agreement is negotiated. In the meantime, the UK would be free to conclude other Trade Agreements with other parts of the world, including the GCC, independently of the EU and probably in a shorter time-frame.  On a longer term view, the UK may end up stronger outside the EU than in it