BRUSSELS - The eurozone economy contracted for the first time ever in the second quarter, with output falling 0.2 percent as German growth succumbed to global strains, official data showed on Thursday The results, released by the EU's Eurostat data agency, come in a context of rising concern that recession, two quarters running of contraction, is now stalking the 15-nation eurozone. The eurozone economy had grown by 0.7 percent in the first three months of 2008, held up by a 1.3 percent rise in Germany. That buoyancy slipped away in the second quarter with the German economy contracting for the first time for nearly four years in the second quarter of 2008, shrinking 0.5 percent compared to the first three months of the year. The French economy contracted by 0.3 percent over the quarter, as did Italy's while Spanish gross domestic product dipped by 0.1 percent. The worst previous performance of the eurozone economy was in the second quarter of 2003 when growth was measured at zero, skirting the contraction seen now. The figures for the EU as a whole were scarcely better, with gross domestic product figures dipping by 0.1 percent from performance in the previous quarter. The overal EU figures were helped by the British economy going some way to bucking the trend with expansion for the second quarter recorded at 0.2 percent. The statistics office also revised downwards its reading for growth in the first quarter, after initially estimating that Europe's biggest economy had expanded by 1.5 percent in the January-March period. Jennifer McKeown, European Economist at London-based Capital Economics, said the figures were "better than we had expected". However she added that this "provides scant consolation given that July's business surveys so far point to a second consecutive fall in the third quarter." If an economy contracts for two successive quarters it is deemed to be in recession. "We now expect the eurozone economy to expand at an annual average rate of 1.2 percent this year, compared to our previous forecast for a 1.7 percent rise," said McKeown. A string of recent data and sentiment indicators meant that economists had been fully expecting Germany's gross domestic product to have pulled back in the second quarter, many had been expecting an even larger contraction. At the same time, 12-month inflation in the eurozone remained at its record high 4.0 percent in July, the same rate as in June, according to Eurostat. It is the fire of high inflation and the ice of low growth which gives the European Central Bank headaches in setting interest rates while also racing the unwelcome spectre of 'stagflation'. Last week ECB president Jean-Claude Trichet stressed that fighting inflation was the "primary objective" of the eurozone central bank despite the evidence of slowing growth. Trichet spoke after the bank left its benchmark interest rates unchanged at 4.25 percent.