The 15 countries that use the euro are officially in a recession, the European Union said Friday, as growth shrank for a second straight quarter because of the world financial crisis and sinking demand.

EU statistics published Friday show the euro zone shrank by 0.2 percent in both the third and second quarters compared to the quarter before. Two successive quarters of negative growth is the usual definition of a recession.

Two of the region's largest economies — Germany and Italy — are in recession, Eurostat said, while France narrowly escaped, growing just 0.1 percent in the third quarter after shrinking in the second quarter.

The spending slowdown and tight credit conditions are starting to hurt: carmakers said Friday that sales are slumping even as euro-zone inflation calms from record highs. So far, euro economies have not seen the jobless rate surge — but the EU executive Commission estimates that it will rise steadily over coming months.

Business and consumer confidence figures show business and consumers are worried, with companies readying to make cutbacks and households trying to save more as they worry about job losses. Both are hurt by tighter credit conditions that raise the cost of borrowing money.

It is the first recession since the euro currency was launched in 1999, when the European Central Bank took control of interest rates. That is the major lever of economic growth because changing borrowing costs can stoke or cool growth.

The last major recession to hit European economies was in 1993 when each country controlled its own monetary policy and could react individually to economy problems.

Euro-zone nations face more trouble in acting alone now and must consult the EU executive before launching major programs to kickstart the economy with state subsidies.

Germany, the largest euro economy, shrank 0.5 percent in the third quarter as its main source of growth — exports — dropped and it could no longer rely on household demand to power the economy. Italy was also down 0.5 percent. Spain also shrank in the third quarter.

They join Ireland, in recession since growth dropped in the second quarter. Third quarter figures for Irish growth are not yet available.

Outside the euro area, EU members Estonia and Latvia — until recently part of the Baltic boom — are in recession.

Britain and Hungary also contracted in the third quarter, remaining a quarter short of official recession. British unemployment is rising, with telecommunications firm BT saying Thursday it would cut 10,000 jobs by March, and the country is bracing for a deep downturn amid a collapsed housing market.

The spending slowdown is hitting major purchases hard with car sales across Europe slumping by 14.5 percent last month, EU carmakers said Friday. The European carmakers' association ACEA said car sales in October dropped for the sixth month in a row from a strong year in 2007.

Ireland and Spain — both suffering badly from the bursting of a housing bubble — saw dramatic falls with Irish sales halving and Spanish sales down 40 percent. Europe's biggest car market, Germany, was down 8.2 percent from weak sales a year ago. France was down 7.4 percent, Britain dropped 23 percent and Italy 18.9 percent.

Fast-growing eastern European nations that had pulled in bumper sales are no longer doing so with overall sales in the 10 EU newcomer states down 3.3 percent despite an increase in Poland.

Major manufacturers saw sales dive, with Volkswagen AG down 7.6 percent, Peugeot Citroen 16.3 percent, Ford Motor Co. 11.9 percent, General Motors Co. 25.2 percent, Renault 19.1 percent, Daimler AG 16 percent and Japan's Toyota was down 23.6 percent.

But there is some good news for shoppers as plummeting oil prices brought yearly inflation down to 3.2 percent in October, Eurostat said, confirming an Oct. 31 first estimate.

The rate of price increases has been gradually falling from a record high of 4 percent in June and July but is still well above the European Central Bank's guideline of just under 2 percent that it looks to when it considers hiking or lowering interest rates.