I've read that Spain is one of the few in the EU, who is ready for the Euro next year, e.g. deficit spending down, inflation low. The average German, whose standard of living is one of the highest in the region, is concerned that the Euro would drive their cost of living even higher. Is this of any concern with the Spaniards as well? That the Euro would also drive your standard of living higher in order to be at par with your neighbors, while salaries remain low?

Well, I think you have not been well informed:

First, our inflation rate, low as it is, is the higher in the UE except for Ireland. Unlike Germany and France, which have levels close to 1%.

Secondly, these statistics are not usually correctly measured, usually because governments want it this way. I.e.: In Spain, the in flation rate would have boomed from the 4% (gov. stats.) to about 7% only by inputing the rise in apartment cost each of these late years (which they do not include). There are other "failures".

All the same, the länder, autonomías, or whatever, did not resign to give less services (which the citizen applauds for he is not aware of the price), so they have created public firms that make all the expense, with the länder or autonomía's backing. But this is not counted as deficit, that's why it is getting down, when it is really growing, but this happens in all Europe, not only Spain.

People here is not worried that prices will go up, since there has been a strong government campaign to inform of the rates of change, the prices will be in both currencies for a time, and so on. I think the prices may rise, but it will not be much. There have been similar experiences all through the world (France after WWII).

I think it is possible there will be higher rises than people believe.

The put up with germans is not going to happen just by having Euro. Having common borders in Europe, and with no export/import taxes inside, it could have happened before, regardless of the currency, specially if one considers that exchange rates have been fixed for years now, and fairly fixed before.

As for salaries and cost of living, salaries are often indiciated here to inflation, so if it goes up, salaries will also do it. That is one of the reason of the tricks with inflation.