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Brexit was Disastrous

9 years on, Britain is not a smoking crater, so Brexit - and de-globalisation by extension - wasn't all that bad, right?

Wrong. And this chart proves it.

The blue solid line is EWU, an ETF holding the UK's largest companies. The shaded area is EZU, a similar ETF for the Eurozone, which excludes notably excludes the UK.

What about currency?

Both EWU and EZU are in U.S. Dollars: currency effects are neutralised.

According to the chart, the UK market still grew 31% between Brexit (28-Jun-2016) and June 2025, meaning that Brexit was not a death sentence.

Relative to Europe, the UK shrank by almost 2/3rds. This illustrates the illusion of growth after separation. You may celebrate being a free agent after a split, but from any other vantage point you're a soggy mess while the ex lives their best life.

What about COVID?

It may be difficult to disentangle the effects of Brexit from those of COVID, but that doesn't mean they are unclear.

I mean ... (gesticulates wildly at the chart)

The continent had its own problems too. It also caught COVID. Remember the horror show that was Italy's hospitals, unco-ordinated government policies, and concurrent migration crises. Not to mention long-standing handicaps like over-regulation, under-investment, and entrenched unemployment. Despite those, Europe still trounced the UK.

More tragically, between the GFC and Brexit (2010-2016), it was Europe that lagged the UK.

Whatever, markets don't tell you anything.

I get this whenever I whip out an index to make a point. Let's break it down. The number on the chart is the price at which people are willing to trade current and future cash flows. It is optimism distilled and quantified. How certain are you that wealth will continue to flow and grow? Every day, thousands of people put a number on it. It might match yours, it might not. That's 'the market'.

Markets aren't everything. In many cases they're an over-simplification. But that doesn't mean they are meaningless.

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Location: Brussels, Belgium

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