The Referendum Dust Is Not Settling – Risk Analysis and What Happens Next?

Post referendum events are showing already that this is simply the biggest event in the UK – politically, socially, economically – since Thatcherism or perhaps joining the EU in the first place. It might prove to be even more significant than those two, if it leads to re-alignment of UK politics and the breakup of the United Kingdom, which seems quite likely.

Procurement practitioners in every sector will no doubt be in meetings today with colleagues, looking at exactly what this means, and starting to think seriously about risks and potential mitigation.  We will have more analysis to come, this week and into the future; we would hope that many organisations will have contingency plans already developed, or at least done a certain amount of serious thinking, but my feeling is not many people really thought it would come to this.

One personal regret – on referendum night I was following Chris Hanretty at the University of East Anglia on Twitter. He had developed a great model of predicted outcomes and called the result hours ahead of the BBC, Sky and other media sources. By 2 am he had the probability of “leave” at 97% and you could still have got decent odds at that point with the bookies - if I had bet on his probabilities I could be a rich man now! As we know, the bookies got it wrong, as did most of the pollsters, and the City, even with their own private exit polls.

Why and how did this happen? It is worth thinking about this because it does highlight some risks for all of us in the months and years to come. There were three communities that came together to push the "Leave" vote over 50%.

1.  The dispossessed, ignored, nothing to lose voters mainly from depressed northern parts of the country. Older, white, male in the main (you may see some Trump or Le Pen similarities here). They have seen no benefits from the EU or globalisation, they see immigration keeping down wages and changing the nature of their local communities. They are mad with the political elite (usually in a quiet, British way) and this was a chance to express that. What do they want? To go back in time, really. To decently paid unskilled jobs, tight communities, and a local doctor who knew your name.

2.  Voters who hate some combination (but probably all three) of Prime Minister David Cameron, the Conservative Party and London. Many southerners have no idea how many people from the provinces hate "London" and everything about it, from the governing elite to the oligarchs’ kids parading around the place in their supercars to the hordes of gawping tourists. Many Labour party voters ignored their own leaders (who gave a very half-hearted support for "remain") and saw the chance to kick Cameron where it would hurt.

3.  The more positive, globally orientated types, often senior people, who see the EU as yesterday's idea, and look to models such as the US, Singapore, Switzerland as evidence that you don't have to be tied to the continent with the lowest growth rate in the world. You might be surprised as to some of the people I spoke to with this view - the CPO for a huge US financial services firm, or the owner of a major procurement solutions business. I would have guessed both as "sensible” cautious folk but no, they were firmly in the "Leave" camp for these reasons.

The problem is that these three groups have different expectations.  Becoming some sort of Singapore means a flexible and skilled workforce, a low tax model, and a welcome to business. Not what our first group want at all, and their dream of a better future will probably and unfortunately remain a dream – we can’t turn the clock back on global economic forces. And as some of the claims of the “Leave” camp unwind and voters ask what happened to all that extra funding for the NHS, for instance, we could see resentment growing even further.

That could fuel the meltdown in conventional politics. The Labour Party has to move fast or it could actually stop being a major, national political force surprisingly quickly; and the Tory Party looks like two parties at the moment. So when you are doing your risk analysis, do factor in more than “just” the leaving the EU technicalities; there could be other shocks ahead.  And as for Scotland and Northern Ireland, let’s leave that for another day.

We could go on, but just two more quick points.  The Guardian has featured some excellent articles since Thursday, way ahead of the Times, too many of whose commentators have taken a somewhat “bad loser” stance, railing at the Leave camp and voters.  Even though the Guardian was also “Remain”, like the Times, it seems to be trying to explain what happened – I thoroughly recommend this brilliant essay from John Harris.  And finally, is there still a way the exit might not happen?

And there’ll be more on Brexit to come this week from us too.

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First Voice

  1. bitter and twisted:

    These 3 groups all want a different exit settlement.

    And for all 3 there are possible exit settlements that are worse than staying in.

    The referendum result is like a signed blank cheque with the value areas blacked out.

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