The 23rd June Referendum is a little over a month away. 
The debate, or slanging match, between the two sides is intensifying. Facts are few and far between, opinions easily voiced. With a sad predictability, neither camp is endearing itself to the non-committed.
Boris Johnson’s Battle Bus with its entirely erroneous claims of the cost of the EU membership is just as unappealing as George Osborne’s persistent and unprovable claims of pending economic disaster.
Stock markets believe in the opinion polls and the bookmakers and expect that the vote will show a majority to remain. This has not always been the case and a concern about leaving was certainly the dominant factor behind a sharp weakening of the pound, especially against the euro, during the spring.
Relative performance of currencies over six months
Source: FE Analytics
However, a vote to remain will now come as no surprise to markets. One to leave, in contrast, would come as a shock. And a shock that will be taken badly. Your author’s view is that we have been given the choice of two unpalatable options.
My inclination is that the EU is an over-institutionalized, unreformable aberration that deserves an almighty heave-ho.
The problem is that to leave would, at least in the short-term, almost certainly make things even worse. It is a cliché to state that markets dislike uncertainty.
It is though our job to predict how the markets will behave in certain scenarios and we have no doubt that to leave would create years of damaging uncertainty. If we are to believe the Bank of England and the Treasury, both have only just started to work on contingency plans, such has been their conviction that the vote will be to remain.
Both are chronically underprepared.
If that is the case for the United Kingdom, it is a safe bet that the same is true of Europe. Neither side will know where to begin. That situation is further complicated by the need for a change of government personnel.
David Cameron’s position as Prime Minister would be untenable, his replacement would need to come from within the Conservative ‘Leave’ campaign.
The leaving process itself is unknown: for example, when should we stop making our contributions to Europe and when would we stop receiving subsidies?
For every person, body and company that receives aid, alternative arrangements will have to be put in place. Even this is on the assumption that the EU will not cut off funding as from June 24th. Every item of EU regulation that affects the United Kingdom will need to be re-legislated. President Obama cast an interesting perspective. 
A glance at a globe reveals that that UK is geographically closer to Europe than to any other continent. In the eyes of America, and doubtless also of China, we are part of Europe.
And what, therefore, should our trading partners do should we choose to abandon trade arrangements agreed with the rest of the Europe? The ‘special relationship’ extends to America’s use of our secret services and air bases, but not it seems to trade. The back of the queue and the naughty step it is.
This is hopefully not an exercise in bias, but a quick overview of the extent of the work that will need to be done and the uncertainty that this will create. This is not only in terms of the outcome, but also of the timescale.
To our uninformed eyes, this is likely to be closer to five years than to one. We have no greater insight than anyone else whether a Leave vote would cause banks to leave London, or Japanese car manufacturers to relocate to Poland, or even if it would precipitate another independence vote in Scotland.
Neither we nor the Bank of England, nor the Treasury, nor Goldman Sachs know what the impact would be on the economy, on inflation, on the pound.
What we all believe is that the shorter-term impact (meaning up to three years) is likely to be detrimental.
It is for these reasons that a Leave vote would be unexpected and taken badly by the financial markets.
Where there is little apparent benefit, the markets will assume the worst. The potential benefits of leaving – regaining sovereignty, taking better control of our own affairs, removing idiotic regulation – are more nebulous and long-term.
It is not possible to insulate portfolios completely against a vote to Leave.
Nor would we wish to; as we have said above, we believe that the decision will be to remain and it is not our style to run for cover at the approach of every bogeyman. Our protection comes from a number of factors: we maintain a high weighting in overseas assets, which will benefit from a fall in the pound.
Our asset allocation is also naturally cautious, while our conviction that every investment should have a margin of safety gives our portfolios a strong bias towards good value and high quality. Where possible we also try to favour investments that can determine their own fortunes, rather than relying on the whims of the market.
No matter what the outcome of the Referendum, the sun will come up the following morning and great companies will continue to be great companies.
Jim Wood-Smith is head of research at Hawksmoor and writer of the group’s weekly ‘Innovation’ blog. All the views expressed above are his own and shouldn’t be taken as investment advice.