Brexit – Economic Impact Simulation
The following simulation shows why the Brexit may not be a good idea.
Assume you have several hundred projects across europe and a few experts in each country to deliver them. Companies usually try to model and optimize the assignment of experts to projects. It is quite interesting to see that adding new political constraints to this model changes the cost function so that the optimizer converges into a new global optimum. Lets assume the cost for sending experts from UK to Europe and vice versa would increase by 20% as a result of increased traveltime, administrative and legal effort.
Before Brexit:
In the following Picture each line represents an assignment between an engineer and a project. You can see collaboration all over the place. Projects in europe get delivered by experts from the UK and on the other hand we see engineers from Europe travelling to the UK if needed:
The green lines show collaboration in projects between experts from different countries.
Now lets assume that as a result of the Brexit the cost for delivery to and from UK increases by 20%. Then the optimizer would converge into the following solution:
Now UK experts are assigned to UK-projects only and european experts get assigned to EU-projects only. For some projects the optimizer can`t even find the required experts anymore due to a lack of skilled resources within the country. On the other hand we face overcapacity in certain areas that may increase the risk of unemployment.
Here the overlay:
Another interesting and potentially counterintuitive aspect is that closing the borders between countries increases the overall commute time.
I will give a talk about the computational model behind the scenes in vienna on Tuesday! Free Registration: http://www.eventbrite.de/e/pass-austria-sql-server-community-meeting-juni-ii-registrierung-24865086142
Hi Lukas,
Interesting simulations and while I do believe that the Brexit effect would be felt in these projects I question the validity of any simulation which forgets that the Republic of Ireland is a separate country and has its own links with Europe. These simulations seem to ignore this fact and totally disregard connections between this EU country and the rest of Europe unless via the UK. Am I missing something?
Cheers,
Des
Hi Des, you are right! I have to admit i accidently penalized Ireland (and not just Northern Ireland) in the cost function.
I will fix this for the presentation on thuesday.
Cheers,
Lukas