THE British economy is on course for 3% growth this year, the pound is close to $1.70 (in part because the markets expect an early interest rate rise, linked to the economy's strength), the FTSE 100 is not far from an all-time high and London's property market is attracting rich buyers from all over the world. So it might seem as if Britain is a highly-attractive investment opportunity.

But any investor who looks at the latest political news ought to be given pause. The local election results, still coming through this morning, show that Ukip has made substantial inroads into the vote share of the main parties, both in Conservative areas (such as Essex) and in Labour heartlands in the North. It is easy to dismiss this as a protest vote, which in part it must be. Ukip's two most resonant themes - British exit from the EU and immigration controls - are issues that are not within the power of local councils. Unlike the National Front in France, the party does not control any cities and has yet to elect an MP. (It may, however, top the poll in the European elections when the results come out on Sunday.)

Nevertheless, it is the effect of Ukip's rise on other parties that makes the difference. Both big parties have been forced to sound more hawkish on immigration; David Cameron, the prime minister, has bought off eurosceptic rebels in his own party with the promise of an in-out referendum in 2017. If the Conservatives win the next election, Britain will face two years of uncertainty while Mr Cameron negotiates new tems with the EU. Few think other EU leaders will be able to concede much, both because a concession for Britain will mean concessions for others and because treaty changes will require referenda in their own countries - polls they may well lose.

In those two years of uncertainty, the UK will hardly be an attractive destination for inward investment. International companies want to use Britain as a base for selling into the EU. That goes for financial services as well; I have heard more than one big bank say that they would rather endure the 50% top rate of tax than see Britain leave. Such a shift would require them to move staff out of London and into a base within the EU. Meanwhile, if the government takes a harder line on immigration, that may also be bad for business; the CBI has complained about the difficulty in getting visa for skilled workers.

And then there is Scotland, which will vote on independence this autumn. The Scots (and indeed the Welsh) have shown little enthusiasm for Ukip's message (opinion polls show Scots 54-24 in favour of EU membership), seeing the party as irredeemably English. As Berenberg Bank remarks

A surge in support for UKIP’s version of “little England” could be grist to SNP leader Alex Salmond’s mill, pushing more wavering voters towards the Scottish independence campaign. Rather than getting the UK out of the EU, UKIP could succeed in getting Scotland out of the UK.

A vote in favour of Scottish independence cannot be ruled out; the yes campaign is behind in the polls but has gained momentum. The Scottsh electorate is more left-wing than its English equivalent; there are more pandas in Edinburgh zoo than there are Conservative Scottish MPs. So dislike of English rule tends to rise when a Conservative government is in office.

Again, a yes vote would create considerable uncertainty. How much of the national debt would Scotland take on? Would it be allowed to keep the pound or remain within the EU? What would happen to big banks like RBS or Lloyds HBOS with substantial Scottish operations? Britain would be more likely to vote to leave the EU in 2017, since the europhile Scots would have left by then. Then there is the 2015 general election, which will be fought on the old constituencies. It is easy to imagine a situation where Labour gets the most seats, thanks to Scottish MPs who would then leave the Parliament in 18 months ot so; that might lead to a change in Parliament or another election. More uncertainty, in short; the very thing that markets don't like.

All this is another example of the subject of the last post; democracy versus economic efficiency. There are plenty of reasons to complain about the EU's regulations or indeed the democratic deficit which saw EU leaders make electorates in other nations keep voting in referenda, like naughty children, until they got the "right" answer.

Nevertheless, it is hard not to see a desire to leave the EU as a "stop the world, I want to get off" attitude. Globalisation means all countries are subject to international forces, whether it is capital markets than can whisk money in and out of the country at a moment's notice, multinationals than can leave in search of friendlier climes or Vladimir Putin's use of Russia's gas power to influence Europe's foreign policy. In or out of the EU, Britain will still be subject to these forces, as it will to rulings of the World Trade Organisation. Indeed, if it wants to keep trading with the EU, it will have to accept many of the EU's rules, as Switzerland knows well.

It is interesting that London, the most globalised part of the UK, has been relatively immune to Ukip's appeal (a spokeswoman said they struggled to attract the "educated, cultured and young", not quite an "oops" moment but pretty revealing). But it is not just because London is filled with the "metropolitan elite"; there are 8 million people in the city of all classes and incomes. It may be because around a third of all Londoners are foreign-born, comprising more than a third of all the UK's immigrants. Not only will foreign-born voters be unlikely to vote Ukip, many British-born residents may well be comfortable with their cosmopolitan surroundings. The French consultate estimates there are 270,000 French people in the london area; earlier last week, at a meeting of alumni of Luiss, the Italian university, it was striking that there were so many young, enterpreneurial Italians who had come to Britain to start a business.

They come because the UK is perceived to be welcoming and far less bureaucratic than their home state. It should be a matter of celebration that so many bright young people want to come here and pay taxes. If the country drives them away, it will be much the poorer.