By Patrick Graham
LONDON (Reuters) - Two-thirds of the way through a trio of political earthquakes that a year ago looked set to shake British business and markets, the best lesson gleaned by financial investors for part three is to hold their nerve.
Stock, currency and bond markets have generally ridden calmly through both a Scottish independence vote that almost broke up the United Kingdom last September and an election that threatened months of horse trading and no clear government.
Neither risk materialised and the bounce in the pound after Prime Minister David Cameron's re-election with an unexpected outright majority could be viewed as a sign of investors' faith that he can weather the third of the trio - a vote on Britain's EU membership.
"The market believes that whether now or later on it will be a yes (to staying in the EU) and there will be no change," said Ian Winship, a portfolio manager at the world's biggest asset manager, Blackrock (NYSE:BLK).
"We were worried ahead of the election because we were not sure what would happen, but at the moment there are still a lot of things going on elsewhere."
Speculators have bet all year on sterling falling against the dollar, but at $1.56
The FTSE 100 index is within 100 points of record highs, and while the volatility implied over the next two years by options markets has risen from record lows in 2014, at around 8.3 it remains well below the average since 2009.
The risks to a UK economy that relies on inflows of investment and capital to fund its 100 billion pound current account deficit are almost certainly greater this time around. Polls on how Britons would vote on the issue if the EU referendum were held today are also closer than they were for Scotland at the equivalent stage.
But with talks on EU reform and legislation for the vote to be settled first, the chief conclusion drawn by analysts and investors is that it will not be a major market risk until well into 2016 at the earliest. Cameron has promised a referendum by the end of 2017 but his spokesman has indicated it could be earlier.
"I don't think Brexit becomes a real issue until well into next year," said Alvin Tan, a currency strategist with French bank Societe Generale (PARIS:SOGN) in London.
"In the Scottish referendum we had one big move following a poll that came out just before the referendum. Before then we had almost nothing."
He was referring to the first opinion poll that showed, erroneously, that Scotland was close to backing independence.
HEALTHY POUND
Far from being affected by worrying over the Scottish vote, in the months before last September's referendum, sterling rose to its highest against both the dollar and a broader basket of currencies since the 2008 financial crash.
That unwound somewhat in the final month as polls swung towards the nationalists, in turn encouraging predictions that sterling would fall in the run in to the May 7 parliamentary elections.
A number of analysts at major banks also argued that the pound was several percent undervalued as a result of concern over the election. But the only obvious evidence of nerves was a jump in prices for options hedging against big swings in the pound - either up or down - around the results.
"If you look back, what you really find is that markets only tend to focus on these things in the last few weeks before the event," said Neil Mellor, a strategist with Bank of New York Mellon (NYSE:BK) in London. "The stakes may be greater this time, but it would be a surprise if that were to change."
Another SocGen economist, Albert Edwards, argues that Britain's current account and budget deficits -- which alone in the developed world stand at more than 10 percent of national output -- make the economy a ticking time bomb for which the referendum could be the trigger.
The lobbyists tasked with promoting London as a financial centre say that even the threat of a departure from the EU makes it harder to secure more of the investment needed to cover those twin economic shortfalls.
Reflecting these risks, research house Fathom predicted after the election that sterling could fall 10 percent, the FTSE 30 percent and 10-year interest rates on government debt rise to the tune of 2 percentage points in the run in to the referendum.
There is no sign of any of those moves yet.
(The story fixes title of Blackrock manager in paragraph 4)