German economic growth more than halved in the fourth quarter, data showed today.
GDP increased by 0.3 per cent in seasonally adjusted terms compared with the third quarter, when expansion of 0.7 per cent was recorded, according to preliminary Federal Statistics Office figures.
A drop in household spending that offset a strong gain in equipment investment and a positive contribution from net trade.
Sebastian Wanke at DekaBank in Frankfurt said the slowdown at the end of last year marked the start of a prolonged period of weakness in Europe's biggest economy that would likely last well into the summer.
Economists have been looking to German households to take over as a motor of expansion from exports, which are expected to post much weaker growth this year.
So far, however, there is little evidence consumers have increased spending despite a steady fall in unemployment from above five million in early 2005 to 3.4 million in January and the prospect of bigger salary hikes in this year's wage round.
Surveys of consumer sentiment have shown households are upbeat about the labour market but worried about inflation and recent turbulence on financial markets.
The Statistics Office said growth in the fourth quarter was powered by a further strong increase in equipment investment and by net trade, suggesting German exporters had yet to feel the pinch from the strength of the euro.