New figures show that Germany, Europe's biggest economy, has fallen into recession.

(Frankfurt)

Germany's economy shrank 0.5% in the third quarter, more than expected, following a contraction of a revised 0.4% in the second quarter

This means the struggling economy has met the technical definition for a recession of consecutive quarterly negative growth.

The world's leading exporter has been hit by weakening activity in its major markets while domestic consumption has remained at low levels.

Corporate investment has suffered in turn from a sharp decline in business confidence.

On Wednesday, a panel of top economists warned that growth would come to a halt next year and criticised government plans for a multi-billion-euro bundle of tax breaks and state investment.

The panel claimed the plans were a "hotch-potch of isolated projects designed to give the impression that the government is doing something".

It said the package was far too small to have a real impact, and was skewed toward specific industries such as car manufacture, as a result of heavy lobbying.

The experts called for more government spending to improve infrastructure and the educational system, even if it meant increasing the public debt.

Chancellor Angela Merkel acknowledged her government was grappling with a crisis that was difficult to manage or fully understand.

But she said Berlin was doing its best to help the country weather the storm.

"We are in a situation now in which it is extremely difficult for all of us to know exactly what the future will bring," she said.

The experts also forecast that German unemployment would rise by 1.1% next year.

(Sky News)

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