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“It is extraordinary that the fundamental economic problems of a Europe starving and disintegrating before their eyes, was the one question in which it was impossible to arouse their interest,” wrote John Maynard Keynes in his polemical classic, The Economic Consequences of the Peace. Keynes was referring to “the big four”, the leaders of main allied powers that had defeated Kaiser Wilhelm’s Germany during World War One – including British Prime Minister David Lloyd George. A Treasury official at the negotiation of the 1919 Treaty of Versailles, a 36-year old Keynes then resigned in disgust, to rapidly write one of the most influential books of the 20th century.

The terms of the Treaty were far too harsh on Germany, Keynes argued. The leaders of America, Britain, France and Italy were imposing massive financial penalties to appease their compatriots, he said, that crushed Germany’s ability to recover. “Reparation was their main excursion into the economic field,” Keynes boomed, in a work that became an instant bestseller. “They settled it as a problem of theology, of politics, of electoral chicane, from every point of view except that of the economic future of the state whose destiny they were handling”.
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Global equity markets ended the week on a positive note, buoyed by signs of progress on EU debt talks with Greece and a glimmer of East-West rapprochement at the Minsk summit. Stocks rallied on both Thursday and Friday, with investors’ risk appetite rising as German Chancellor Angela Merkel shook hands with, and then smiled at, Greek Finance Minister and Negotiator-in-Chief Yanis Varoufakis. That came alongside a Ukraine ceasefire deal – again, brokered by Merkel – which pushed European shares and bonds higher, amid hopes of easing tensions between Russia and the West.

Then we had news of better than expected eurozone growth during the fourth quarter of 2014. The combined economy of the 19-country currency bloc expanded 0.3pc during the final three months of last year, reported Eurostat, with GDP rising at an annual rate of 0.9pc. This improvement was led by a 0.7pc increase in German national income, compared to just a 0.1pc expansion the quarter before. There were also indications of stronger growth in some “periphery” member-states, with Spain and Portugal notching-up figures of 0.7pc and 0.5pc respectively.
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