Japan sees its economy shrink 3.3 per cent

Japan has sunk into its worst recession since the oil crisis of the Seventies with its economy contracting by 3.3 per cent in the final quarter of last year.

The bad results, along with Germany and Italy's poor showings last week, means Britain is not the G7's worst performing country as predicted by the International Monetary Fund last month, but is roughly in the middle.

The downturn saw the world's second biggest economy shrink at an annual pace of 12.7 per cent last year, dwarfing the current scale of the British recession.

Japan has been hit particularly hard by falling global demand for its products.

Exports of electronic goods and cars have slumped and production has been slashed.

However, the Nikkei largely brushed off the latest economic news, losing only 0.4 per cent, while the broader Topic share index rose 0.7 per cent.

Prime Minister Taro Aso is reported to be considering new stimulus measures to boost the economy, including a package of government spending worth £152 billion.