Germans Ponder If Europe Behaves Like Them Would That Backfire - by Rainer Buergin and Simone Meier

Germany’s drive to mold the rest of Europe into its economic image may come at a cost for the country’s export machine.

As governments from Italy to Spain and Ireland seek to convince Chancellor Angela Merkel and bondholders that they can fix their balance sheets, officials are pushing through policies designed to restore their competitiveness.

The risk to Germany, whose exports account for almost half of gross domestic product, is that transforming the region’s struggling nations into blueprints of itself may work too well. Efforts by euro-region governments to cut labor costs may help exporters across southern Europe challenge the dominance of German competitors, ranging from Siemens AG, Europe’s largest engineering company, to carmaker Bayerische Motoren Werke AG.

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