Fall in German output worsens recession

A shocking decline for the mighty German economy has sunk the eurozone even deeper into recession.

The single currency bloc suffered a far worse than expected 0.6 per cent fall in output in the final quarter of 2012 – twice as bad as the UK's 0.3 per cent reverse, and the region's third successive quarter on the back foot.

Germany, economic engine room of the eurozone, slipped 0.6 per cent in its worst performance since the immediate aftermath of the financial crisis in 2009. The main culprit was slackening export demand from elsewhere in Europe.

French output shrank 0.3 per cent, but in the struggling periphery the damage was far worse, as Italy declined 0.9 per cent and Spain 0.7 per cent while bailed-out Portugal slumped a mammoth 1.8 per cent quarter on quarter. In Greece – suffering its sixth straight year of recession – the economy shrank 6 per cent year on year.