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German reunification not only caused unemployment to rise even further, but also placed an enormous strain on the state budget. The disintegration of the Eastern bloc put further pressure on German capitalism, for it meant not only new markets for German products, but also new geographical opportunities to relocate production. This proved extremely attractive for German companies, which were able to find enough qualified workers at significantly lower wages without modifying their training systems significantly. The introduction of the euro provided Germany with the medium-term advantage that other European countries could no longer counter German wage pressure by devaluating their own currencies. In the end, Germany’s export orientation produced large export surpluses at home, but also caused growing international trade imbalances.
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