Visualising Brexit

Brexit is arguably the most divisive political topic in the United Kingdom for a generation. The vote to leave the European Union (EU) on June 23, 2016 has created an extraordinary amount of political and economic uncertainty, and has simultaneously revealed fault lines in British society which seem hard to reconcile without an understanding of both sides of the argument.

Following on from my risk visualisation article in the 2017 Spring edition of Enterprise Risk magazine, the focus of this article is to showcase how different forms of visualisation can convey complex information simply in order to aid decision making. I have created three visualisations related to Brexit:

1. A graph illustrating the divergent views of UK citizens on Brexit regarding prosperity and sovereignty – see Prosperity forecasts over a sovereignty continuum.
2. A game theory Boston Matrix which clarifies the only apparently viable UK and EU Brexit negotiating strategies and outcomes – see UK-EU negotiating strategy game theory.
3. A Brexit risk visualisation map of the primary uncertainties linked to the UK’s five main Brexit objectives.

It is worth noting that Brexit is a dynamic process and the landscape may have altered from the end of October 2017 when this article was finalised to its publication in December 2017. The aim of the feature is to set out some techniques for visualising uncertainties, rather than to make definitive predictions on Brexit.

Sovereignty continuum

The modern international political system is arranged around the concept of nation states being sovereign. The reality is that sovereignty exists as a continuum, starting from having lost all sovereignty through annexation (as witnessed in the Crimea) through to having absolute sovereignty to the point of isolation from the rest of the world (as is currently the case in North Korea). An entire spectrum of sovereignty exists between these two extremes, including close political union between nation states through a supranational organisation such as the European Union, to looser arrangements between nation states through treaties and international agreements including trade agreements. Although there is no explicit correlation between levels of sovereignty and prosperity, opinions are heavily divided on which political arrangement may yield the best economic results for the UK in the context of leaving the European Union.  

There are various reasons why the electorate voted the way they did in the referendum. However, by aggregating the views of members of organisations representing each side of the argument, a picture emerges that explains two very different schools of thought.

According to the pro-European Union campaign Open Britain, the prevailing view of people who voted to remain part of the EU appears to be that greater economic prosperity can be gained through access to the European Single Market and Customs Union. This results in having access to four freedoms – the freedom of movement of capital, goods, services and people. This is illustrated by the blue line in the diagram, peaking at co-operation and falling drastically around the point of nationalism. This is primarily due to loss of access to the Single Market and damage to the UK’s prominence as a financial services powerhouse, but it is also partially due to loss of European passporting rights and difficulty in attracting and retaining skilled labour from abroad.

On the other hand, according to the pro-Brexit campaign group Leave.EU, the prevailing view of people who voted to leave the EU appears to be that while some short-term economic hardship may be experienced through the re-positioning of the UK outside of the Union, the UK should ultimately be more prosperous once freed from the constraints brought about by being a member of the EU. This is illustrated by the red line in the same diagram. This line peaks at nationalism due to greater access to world markets and being subject to less domestic competition for low-wage employment due to stricter immigration controls. The line falls towards co-operation due to the cost of gaining access to the Single Market and the strains on infrastructure and services due to uncontrolled immigration.

The prime minister’s refusal to answer which way she would vote in a hypothetical re-run of the referendum reveals a conundrum she is facing. Which part of the sovereignty continuum does she and her government believe will bring the most economic prosperity to the UK? Her chancellor, foreign secretary and secretary of state for exiting the EU all have seemingly differing opinions on which position on the graph would bring optimal benefits to the UK. This reflects the diversity of public opinion throughout the UK and may result in a compromise strategy where the two curves in the diagram meet, which is potentially sub-optimal in terms of economic output. The government’s economic impact studies may reveal the optimal course of action, but will that be palatable to a heavily divided electorate? It will be impossible to please everyone, yet the government may well have to follow a strategy which pleases no one. In the end, it may all come down to how skillful the UK’s negotiators are at finding common ground or extracting concessions from the EU. 

Negotiating strategies

Game theory is the study of modelled outcomes between two parties presumed to be acting rationally where the available strategies range between conflict and co-operation. There are essentially four possible outcomes using the prisoner’s dilemma version of game theory: win-win, lose-lose, win-lose and lose-win. In the context of Brexit negotiations, a win would indicate a successful negotiating strategy resulting in relative economic or societal benefits to the host population, whereas a loss would be indicative of a failed negotiating strategy resulting in economic or societal harm. The EU-UK Brexit negotiation strategies and outcomes can be modelled as shown in UK-EU negotiating strategy game theory. 

Visualising Brexit negotiations using game theory based on the political rhetoric prevalent up until the end of October 2017 helps us to draw the conclusion that there really are only two outcomes that seem plausible: lose-lose or win-win. These two polar opposite outcomes will have very different and lasting impacts, so it is important to have an understanding of what is at stake by modelling the uncertainties related to the UK’s key strategic objectives.

Visualising Brexit uncertainties

In order to visualise the uncertainties brought about by Brexit from a UK-centric point of view, we have to first establish the UK’s objectives in terms of what success would look like. I have condensed the Prime Minister’s Lancaster House speech on January 17, 2017 down to the following five objectives: sovereignty, economic prosperity, controlling immigration, security and territorial integrity (defined as the status quo of all constituents of the United Kingdom remain unchanged so, for example, Scotland will not become independent from the UK).

I have identified the uncertainties, including threats and opportunities brought about by Brexit through an analysis of the political, economic and social context in news reports and conversations with experts in their field. I then linked these to one or more of the five objectives, and analysed each in terms of my subjective view on the potential positive or negative impact to the UK depending on the outcome of negotiations. It is an attempt to simplify a complex and nuanced landscape into a digestible format which may obscure some of the finer complexities, however is useful to gain a holistic understanding of the main issues at stake.

Every square on the Brexit risk visualisation map represents a threat and/or an opportunity, and each circle represents a UK objective relevant to Brexit. The size and border colour of each square denotes a level of impact. Small yellow squares indicate a relatively smaller impact from a qualitative point of view, medium amber squares indicate a medium impact and large red squares indicate a relatively larger impact. The direction of each arrow indicates a cause-and-effect relationship.

In this example, Brexit has resulted in uncertainty over the role and influence of the European Court of Justice which could have large implications for the UK government’s objective to achieve greater sovereign control. Unrelated to that, the objective to have greater sovereignty from the EU may result in some uncertainties related to how we co-operate with the EU on the movement and disposal of radioactive materials and nuclear waste through Euratom. This could have a medium impact. In addition, the production and distribution of chemical substances through the REACH regulations could have a relatively small impact. The full Brexit risk visualisation map illustrates the complexity of some of the primary uncertainties, including threats and opportunities, against the UK’s five objectives related to Brexit.

It is interesting that the largest number of uncertainties relate to the prosperity of UK citizens. Furthermore, this visualisation reveals that immigration is the only uncertainty that links to four out of the five objectives, which may explain why it was such a central issue during the referendum campaign. This map can be further expanded by linking uncertainties to each other and by including and quantifying all primary, secondary and tertiary impacts for a more complete picture of the potential total impact of Brexit. It can be used to visualise and prioritise the areas of biggest impact for the purposes of forming a negotiating strategy, and can also be used to model different scenarios based on the outcome of negotiations.

By creating a similar visualisation including in-depth analysis from an EU point of view, the UK’s negotiators may be able to identify commonalities regarding objectives and uncertainties, respective areas for compromise, areas for mutual co-operation, and use it to formulate a win-win negotiating strategy based on the best possible economic outcome for both the UK and the EU. 

Winston Churchill himself once quipped: “Out of intense complexities, intense simplicities emerge.” Since risk visualisation can help to simplify complexity and be a powerful decision making tool at all levels in the public, private and charity sectors, my challenge to you is this: How could your organisation benefit from risk visualisation, and what steps are you going to take to implement it?  

View the Visualising Brexit story in SharpCloud to interact with different visualisations and view over 40 videos and explanations of the uncertainties related to Brexit.

For more information on risk visualisation, visit www.riskcloudconsulting.com, join the Risk Visualisation Network and/or watch the following introductory video:

(This article appeared in the Winter 2017 edition of Enterprise Risk Magazine and RiskCloud Consulting owns the copyright)