Recession in Germany and a slowdown in China painted a bleak economic picture on Tuesday, a backdrop which top miner BHP Billiton cited in abandoning a $66 billion bid for Rio Tinto.

China, the world’s biggest consumer of many metals, this month unveiled a 4 trillion yuan ($586 billion) spending package to prop up its economy, but growth would still likely slow to around 7.5% in 2009, the World Bank said. That would be China’s slowest growth rate since 1990. Official data confirmed Germany is in recession for the first time in five years, with foreign trade a big drag on gross domestic product in the third quarter.

After Britain announced on Monday a 20 billion pounds fiscal boost, including a 2.5 points cut in value-added tax, the United States and European Union will put their shoulders to the wheel.

The European Commission will propose on Wednesday measures to stimulate the recession-hit European economy including VAT cuts and a call for lower European Central Bank rates. A draft proposal, seen by Reuters, did not specify the size of the stimulus plan, which Germany said last week could be worth some 1% of European Union GDP.

The French government will launch a “quite massive”stimulus plan in the next 10 days, President Nicolas Sarkozy said on Tuesday. Germany is lukewarm about some of the EU’s proposals.

What started more than a year ago as a meltdown in the US market for high-risk mortgages has engulfed the world, freezing access to credit, sparking bank collapses and requiring the financial bailout of entire countries. Bank of England Governor Mervyn King said Britain’s fiscal package would mitigate its recession but not solve it.

“The most pressing is to ensure that normal bank lending is resumed,”he told a parliamentary committee. “Without that, the downturn in activity could become protracted and extremely damaging.

“Following huge losses tied to the US housing market collapse, banks continue to hoard cash rather than lend it to each other, to businesses and individuals. Corporate gloom was widespread, eclipsing relief at the rescue of number two US bank Citigroup.

Global financial turmoil forced AXA, Europe’s second-biggest insurer based on premium income, to cut its 2008 underlying profit forecast and made its 2012 financialgoals increasingly obsolete.

The world’s largest steelmaker ArcelorMittal is poised to cut 16 percent of its US workforce, beginning in January, the Wall Street Journal said. Australia’s Qantas airline said demand had slowed, forcing it to cut its 2009 profit forecast.