Brexit – A Non-Political View

As Jack Ma recently said at the World Economic Forum in Davos, "there are no experts of tomorrow only of yesterday."

How many in London expected the Leave vote to win on the 23rd June 2016? Why did Leave unexpectedly win? What is going to happen next?

We are in a VUCA world: Volatile, Uncertain, Complex and Ambiguous. The Brexit result and the election of Trump confirmed this. The current situation in the UK is a result of the UK political system not being able to cope with a VUCA world.

The 2016 Referendum and Immigration

The referendum result was that 17.4 million (52% of voters) voted to Leave and 16.1 million (48% of voters) voted to Remain. As the turnout was 72.2%, it meant that 37.5% of eligible voters determined the result. Excluded from the vote were UK citizens who lived abroad for more than 15 years and EU citizens living in the UK. Also, because of the timing of the vote, many students had been studying for exams and had not registered to vote. It can be assumed that these three groups would have been predominantly Remain.

A map of the UK referendum results shows a clear pattern with London and the Home Counties, Bristol, Cambridge, Oxford and other more prosperous areas voting to Remain along with Scotland and Northern Ireland. The remainder of the UK voted to Leave.

Although the referendum was about the UK’s continued membership of the EU, the subject of immigration was a major influence on the voting. London in particular has for centuries benefitted from different waves of immigration. For instance, F(r)enchurch Street, Lombard Street and Old Jewry are reference to French Huguenots, Northern Italians and Jews respectively. Today, London’s immigrants not only contribute to the wealth creation of the City, but also ensure that essential services are maintained. Whilst the benefits of immigration are recognised in London, it is not so in many other areas of the UK.

Immigration has been blamed as a factor in the rise of house prices. Rising house prices is of benefit to those who are already on the housing ladder but is a problem for those not on the housing ladder. The increase in house prices is caused by a shortage of supply compared to demand. It is thought that by reducing immigration that the demand for housing will be reduced and prices will fall to levels at which those not on the housing ladder can afford to purchase.

Immigration has also been blamed as a factor for stagnating wages. Other causes of stagnating wages are cheap imports, the commoditization of certain skills and the emergence of new wealth creation models less reliant on physical labour.

Coming back to the result, another important pattern was that areas with high numbers of Commonwealth-origin inhabitants tended to vote Leave. There are a number of possible explanations for this, but the pattern is more important than any explanation.

The level of immigration to the UK was considered to be an important issue for many years. The UK Government set targets to limit immigration, but under the leadership of Theresa May, the relevant department was unable to meet those targets.

UK Election 2017

The Conservative Government had a parliamentary majority when Theresa May called a UK General Election for the 8th June 2018. She probably believed that the Conservatives would crush Labour because of the perceived "unpopularity" of its leader Jeremy Corbyn. At the election, Brexit was a policy of both Conservatives (Hard) and Labour (Softer). There was a movement among "Remoaners" as they were now called by some to vote tactically against the Conservatives. The result was that the Conservatives lost their parliamentary majority and had to form a coalition with the Democratic Unionist Party of Northern Ireland.

Some politicians state that the majority of the Electorate voted for pro-Brexit manifestos. Others recognize the result as the revenge of the Remainers. At present, the Conservative Government has been unable to get the Parliament to approve the Brexit deal that Theresa May has negotiated with the EU.

Conclusion

For many UK politicians the "Executive" (the people) have voted to Leave and have confirmed this by voting for parties with Brexit in their manifesto. They refuse to go back to the Executive for a second opinion as this would undermine the system. Complexity arises from the geographical distribution of Leave, Remain, Conservatives and Labour. The current impasse is a result of a binary system being unable to cope with this complex situation.

Translated into business terms, consumers were offered a "Leave" product based on effective marketing which guaranteed that it would fit his needs. As the product was being delivered the consumer realised that the product did not meet their needs. The consumer has indicated to the producer that he would not like a "No-deal Brexit," and that he would like to consider cancelling his order. The producer reminds the consumer that he has ordered Brexit and that he will receive it even if he has changed his mind.

In business, such behaviour results in the consumer going to a different producer. In the absence of an alternative producer, a new entrant will enter the market and satisfy the consumer’s needs. Although there is no threat of new entrants, is it not time for the political system to reform?

Mark Kissack

Mark Kissack, is an expert in business transformation, key performance indicators and performance improvement. Entrepreneur, business advisor, speaker and writer.