Industrial production in the 16 countries that use the euro slumped in the year to April according to official figures - another indication that the euro-zone may emerge from recession later than the US or Britain.

The European Union's statistics office, Eurostat, said on Friday that industrial output fell a record 21.6 per cent annually from March's 19.3 per cent.

Europe's export-driven economy relies heavily on industrial output, and sharply lower industrial output was blamed for a 2.5 per cent fall in the euro-zone's first-quarter gross domestic product.

The recession in Germany, the euro-zone's biggest economy, was even sharper, as demand for its high-value exports such as cars and heavy machinery slumped.

Earlier this week, figures for Britain, which is outside the euro zone, showed that industry may be picking up.

Many economists think Britain's manufacturers may be benefiting from the pound's fall against the euro and the dollar, and that conversely Europe's exporters are struggling as the euro remains strong in the foreign exchange markets.

This apparent multi-speed recovery could well raise tensions at this weekend's gathering of G-8 finance ministers in Lecce, Italy.

Despite agreeing to a raft of initiatives at the G-20 summit in April, splits seem to have emerged among policymakers over tax and monetary policies in the last few weeks.

Europe, especially Germany, has appeared increasingly at odds with the US and Britain, particularly over the policies being enacted by the US Federal Reserve and the Bank of England.

Both banks have embraced quantitative easing - pumping newly created money into the economy by buying government and corporate bonds - unlike the European Central Bank.

Meanwhile, there are some worries in the US and Britain that continental Europe has not done enough to deal with the recession - hence the continuing dearth of resurgent signs in the euro-zone economy.

"The Americans believe that the Europeans are 'free riding' on the back of American monetary and fiscal stimulus," said Neil Mackinnon, chief economist at ECU Group.

And Britain's finance minister Alistair Darling suggested to the Financial Times newspaper on Friday that some European governments have failed to clean up their banks as much as was needed.

"If there is a problem, it doesn't get any better by walking around it and hoping it will go away," he told the newspaper.

Capital Economics' Antonucci said the banking sector could turn out to be one of the euro-zone's main vulnerabilities, echoing recent warnings from the International Monetary Fund, which has estimated that the banks in the single-currency zone have so far incurred just a fifth of their potential losses.

"With measures to help the banking sector still disappointing, the risk is that the euro-zone has yet to feel the worst of the credit crunch," said Antonucci.

AP