A return to Germany's Deutsche mark could lead to a 15% contraction in the country's economy over two years, the chief economist of German insurance firm Allianz SE (AZSEY) warns in an opinion piece published Monday.

A new German currency would probably appreciate by a "massive" 15% to 20% against the currencies of the country's trading partners, leading to a drop of up to 20% in German exports and a 5% drop in gross domestic product within a year, Michael Heise writes in German newspaper Die Welt.

Given that a return to the D-Mark would probably also lead to a "complete break-up of the euro zone," the ensuing banking crisis and collapse in European growth would probably reduce German economic growth by a cumulative 15% over two years, Mr. Heise says.

The impact of a break-up of the currency union would be a "far stronger shock than the Lehman Brothers crisis," the economist warns.

In the ensuing years, the higher cost of producing goods in Germany would encourage companies to move capital out of the country, he said.

"Over four or five years after a break-up of the currency union, the German economy is likely to suffer production losses of up to 25%, compared with normal economic development," Mr. Heise says.

Write to Tom Fairless at tom.fairless@dowjones.com

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