Protectionist worries and dire figures from a shrinking euro zone economy set a gloomy tone for a meeting of G7 finance leaders on Friday. Australia's parliament pushed through a stimulus plan and the US Congress was due to vote later on President Barack Obama's rescue package to lift the economy out of recession. Ahead of the Group of Seven meeting in Rome, data showed the eurozone economy as a whole and those of its three biggest members -- Germany, France and Italy -- all contracted more sharply than expected in the final quarter of 2008. The German and Japanese finance ministers voiced concern about rising protectionist sentiment. Japan's Shoichi Nakagawa said his French counterpart wanted to raise the issue of a “Buy American” clause in US stimulus plans, and other G7 ministers had backed her call for a discussion. “For the United States and Europe, who have been pushing for open markets, or any other countries to resort to protectionism under current circumstances would be, I think, absolutely wrong,” Nakagawa said. German Finance Minister Peer Steinbrueck said: “We notice more and more that protectionist tendencies are no longer ruled out on the international stage.” As the crisis hits profits and jobs, governments are coming under pressure to defend domestic workers and industries. Britain has seen wildcat strikes against the use of foreign labour, and France last week suggested its car makers should move plants back home from the Czech Republic. The 15-nation eurozone economy saw its deepest contraction on record in the fourth quarter of 2008, shrinking 1.5 percent against the previous three-month period. German GDP shrank 2.1 percent quarter-on-quarter, the worst contraction since the country's unification in 1990. “The economy is now in its worst postwar recession. Due to this low starting point, we've cut our GDP forecast for 2009 to -3.6 percent from -2.5 percent. Downwards risks predominate. There can be no talk of economic recovery for now,” said Alexander Krueger of Bankhaus Lampe. A French prediction of a more than one percent contraction in 2009 added to the gloom before the weekend G7 meeting. “The first quarter will be difficult ... We will have a difficult year,” French Economy Minister Christine Lagarde told RTL radio. She was speaking the day after the statistics office said French gross domestic product contracted by 1.2 percent in the fourth quarter of 2008. Italy's economy shrank by a quarterly 1.8 percent in the last three months of 2008, the steepest drop since 1980. European Union member Estonia saw GDP dive 9.4 percent year-on-year in that period, its worst performance ever. Economic recession, triggered by a banking crisis, is spreading quickly through all continents and threatening social order in developed and developing countries alike. Companies are struggling. France's Renault scrapped its once sacrosanct 2009 profit targets, dropped its divided and slashed output as it warned that the crisis would change the landscape of the global auto industry. But some of Friday's corporate news from Europe was more encouraging. German industrial conglomerate ThyssenKrupp unveiled a better-than-expected pretax profit and new orders in the fiscal first quarter, and saw its shares rise 4.4 percent. More details emerged about plans to lift the U.S. economy out of recession, with a plan to subsidise mortgages raising hopes for a solution to the slump in the U.S. housing market which has reverberated around the world. The US Congress is due to vote on an economic stimulus bill later on Friday after Democratic leaders in both houses tied down final details of the deal, which includes about $507 billion in government spending and $282 billion in tax cuts. Last-minute deal-making saved Australia's A$42 billion ($27.4 billion) stimulus plan.
