German women produced on average 1.38 children in 2008, compared to a rate of 1.37 in 2007, according to the Federal Statistics Office.

In total, 683 000 babies were born in Germany last year, 2000 fewer than in the previous year.

Merkel has launched a host of initiatives to encourage Germans to have bigger families, including creating more creche places and offering generous parental leave policies.

Family Affairs Minister Ursula von der Leyen had hoped to hit the level of 690,000 births last year.

For the past 40 years, the birth rate in Europe's most populous country has oscillated between 1.3 and 1.4, compared to a European average of 1.5.

Germany finds itself at the bottom of Europe's birth table, along with countries such as Italy, Spain, Poland and Portugal.

For the first time since the country was reunified in 1990, women from former communist East Germany had more babies than their counterparts in the west.

Germany, like many European countries, is grappling with a greying population with a falling number of working people supporting with their taxes a rising number of retirees.

AFP

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