Tuesday, 27 September 2016

Will Brexit be Endo or Exo?

We all know that when wood burns, it gives off energy. We also know that it only does this if we supply some energy first, using some form of lighter. This is represented by the diagram on the right. The line rises as we add the lighter's energy, and then we lose it in heat to fall to a lower energy state. This is called an exothermic reaction, abbreviated EXO.

An endothermic reaction on the left is similar, in that energy has to be added to make the change take place,. But the products absorb energy and end up at a higher energy level. Baking a loaf or cooking an egg are two examples of ENDO.


Brexit is similar:
  1. Energy needs to be invested to make the transition. We need to re-negotiate the UK's position with the EU and the rest of the world, change the UK's laws, and businesses need to change their business practices.  The effort and cost for that transition is the hump on the graphs.
  2. The end-result can either be 
    • To reach a higher plane (ENDO), having gained from the transition, or 
    • To fall to a lower plane (EXO), having lost from the transition. 


People like Douglas Carswell in UKIP, who has long advocated leaving the EU, suggest it is easy to make the transition. In which case the investment would be relatively modest, represented by a small hump on the graph.

But increasingly it appears that the transition will require a massive amount of effort, over a significant period of time:
  •  All the UK Acts and Statutory Instruments need to be reviewed and updated, a monumental task. 
  • If Brexit is to involve moving to World Trade Organisation rules, then all the quantities allowed for the EU will need to be allocated between the UK and the rest of the EU for each relevant product.
  • There's much else besides, not just in Govenement circles but also in every business affected.

It could take years and involve masses of people. People who can't be doing anything else constructive, so that loss is an additional hidden or "opportunity cost". Indeed, is there enough skilled people available?  A lack of skills risks a mess, that would also carry a cost to everyone affected.


Let's nonetheless assume that the investment is feasible in reasonable timescales.

Clearly this effort and cost will only be justified if the transition is an ENDO change, moving to a higher plane. Not only that, but it would need to be to a significantly higher plane, taking into account pros and cons.  The bigger the transition investment, the higher that plane will need to be to justify that investment.

An EXO change, falling to a lower level, is clearly ridiculous.


The Government needs to decide what form of Brexit it will aim for in negotiations with the EU. For example, will it be a 'Hard' (or 'Clean') Brexit  that involves leaving the Single Market and Customs Union? ,

We can then consider a number of aspects as to whether they are ENDO or EXO, and how big the rise or fall is relative to the transition investment for that aspect. Aspects include:
  1. Economy, including affects on the City and inward investment,
  2. Immigration/Emigration (versus affect on Brits living/working/travelling in EU)
  3. External borders, especially between Eire and Northern Ireland 
  4. Control of legislation (versus lack of infleunce in Europe)
For each aspect, a graph like those above can be created showing the investment required, and how big is the net projected ENDO or EXO affect.  A summary graph can then be created as the sum of the individual aspects.

Certainly it is clear that the transition investment is only worthwhile if the preferred form of Brexit is strongly ENDO overall, with a reasonable and feasible transition investment.

The overall picture then needs to be debated in Parliament, covering both the end-result and the transition. Assuming the agreed form of Brexit is sensible, which was not part of the first referendum, there should then be a second referendum on the proposal before the Article 50 button is pressed.

The first referendum result was a wish to leave the EU. But surely the British people would not expect this to happen at all costs?

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