Gross domestic product in Europe fell during the fourth quarter as exports and consumer spending dropped.
The European Union's statistics office said the economy of the Eurozone and the European Union fell by 0.3 per cent during the quarter. That follows 0.1 per cent growth for the Eurozone and 0.3 per cent growth for the EU during the third quarter.
The Eurozone comprises the 17 nations that use the Euro currency, while the European Union contains 27 nations.
Driving the economy lower was a 0.4 per cent drop in exports. Consumers also cut back in the face of recessionary fears, as household spending also fell by 0.4 per cent.
Consumer spending accounts for about half of all economic output in the region. Persistently high inflation, rising unemployment and government austerity measures have curtailed European's desire to spend.
If the European economy were to shrink in the first quarter of 2012, that would signal an official start to the region's second recession in three years. A recession is defined as two consecutive quarters of negative economic growth.