Even tax cuts have failed to fill the shops

According to the German retailers' federation, HDE, Christmas sales were down 3-4% on the previous year.

The bad news accompanies a survey of 2,000 consumers by market research firm GfK, which suggests shoppers are no more optimistic about 2004.

Germans' readiness to shop in December fell to its lowest ebb since August, with no improvement seen for January.

GfK said that its survey had been carried out before tax cuts were agreed in mid-December, which could sharpen shoppers' appetite for consumer spending.

The HDE retail association said that despite the slowdown, business at Germany's shops was brisker once the cuts were passed by parliament.

Trade surge

But although it cautioned against taking the readings too gloomily, GfK said consumer sentiment was "moving sideways".

Its figure for forward-looking sentiment - while higher than it had been at the start of 2003 - was still half the level of January 2002, as euro notes and coins were introduced.

The news came as Germany's Federal Statistics Office released trade statistics for 2003, showing a record surplus of exports over imports of 135bn euros ($170bn; �95bn).

Combined with slow consumer spending, that could indicate a continued reliance on exporters to drive Germany's economic recovery over and above domestic demand.

But the preliminary figure, 2% up on the previous year, contains a 3% growth in intra-European trade and just 1% growth in exports to non-EU countries.