At the start of the 1990s, for instance, state subsidies ignited a construction boom which petered out in the middle of the decade, not least because public authorities had to curb their investment and overcapacity already existed in the private sector. The subsequent adjustment process is still continuing.
The economic dynamics in Germany have been additionally slowed by a sharp increase in the level of taxes and social contributions in order to finance the burden of reunification. Moreover, the process of interest rate convergence during the changeover to the euro is likely to have been one factor impeding growth in Germany in relation to the rest of the euro area.