The contraction in Europe’s largest economy deepened the recession across the 17-country eurozone.
Eurozone output shrank by 0.6 per cent in the quarter – the steepest fall since 2009, when the world’s economy was in its deepest recession since World War II.
In 2012 as a whole the eurozone economy shrank by 0.5 per cent, in stark contrast to 2.2 per cent growth in the US and Japan’s 1.9 per cent.
The eurozone has contracted for three straight quarters. A recession is officially defined as two quarters of falling output.
It is not the only struggling region but the figures show that the bloc is doing worse than others.
If the fourth-quarter drop applied to the entire year, the eurozone’s economy would be contracting by around 2.5 per cent annually – much worse than the 0.1 per cent drop in the US and Japan’s 0.4 per cent fall.
And the crisis has not just hit weaker, debt-laden economies such as Greece and Spain, where governments have been aggressively increasing taxes and cutting spending in order to meet the conditions for national and banking bailout loans inflicted on them by sceptical investors and central banks.
While Germany’s economy shrank by 0.6 per cent, France also saw output drop by 0.3 per cent and both economies are now one quarter away from formally entering recession.
About one in 10 people in France are out of work and the country’s exporters are struggling, not least its car-makers, with both Peugeot-Citroen and Renault struggling and workers across the industry fighting job losses, pay cuts and factory closures.
Seven eurozone countries are already in recession – Greece, Spain, Italy, Cyprus, Portugal, The Netherlands and Finland.
Alongside the vicious and damaging austerity policies that governments are pursuing across the eurozone, exporters have had to contend with a currency that has been rallying on exchange markets, making their products more expensive.