What Germany gets out of the euro

The Guardian has an intriguing story tonight. It reports that the German Chancellor Angela Merkel told a recent EU Summit meeting that Germany might leave the euro if it didn’t get its way on a bail-out mechanism.

The threat is academic as Merkel largely got what she wanted. But there’s one other thing worth remembering: however galling bailing out other euro-zone members is, Germany benefits from the euro.

If Germany had its own currency, it would be worth far more than the euro is which is kept down by the problems of the PIGS. A Germany that was still using the Deutschmark would not be able to export anywhere near as much as its exports would be far more expensive on the international market. German economic growth would, in these circumstances, be badly hit.