The German economy, which is the largest in Europe, has not been performing well in recent years, and, according to the latest figures released Thursday, it slumped into recession last year.
Germany is far from shaking off its reputation as the sick man of Europe. That reputation was further strengthened Thursday when official figures revealed the German economy shrank in 2003.
Industry leaders said the decline of German Gross Domestic Product by 0.1 percent marked a new low for German economic development.
This is the worst performance for Europe's largest economy since 1993 and bad news for Chancellor Gerhard Schroeder as he struggles to create new jobs for the more than four million Germans currently unemployed.
Germany's Economic and Labor Minister, Wolfgang Clement, shrugged off Thursday's dismal figures, saying there was every indication the economy is on the brink of recovery.
Adding to the government's problems is the growing budget deficit, which for the third year in a row has exceeded the limits imposed by the European Union. Under EU rules the deficit must not exceed three percent of the Gross Domestic Product.
The European Commission, which runs the EU on a day to day basis, earlier this week, decided to file legal action against Germany and France, which has also exceeded government spending limits.
Both countries, if found by the European Court of Justice in violation of EU rules, could face heavy penalties.