Stuart Pearce's England Under-21s were crushed in their European Championship final in Malmo on a familiar evening that featured a goalkeeping error and a ruthless German victory.

Mesut Ozil's long-range free-kick embarrassed stand-in goalkeeper Scott Loach, but England were already trailing at that stage to Gonzalo Castro's opener.

Sandro Wagner then added two late goals to continue Pearce's jinx against Germany, after losing to them twice as a player in major tournaments.

At senior level, England's clashes against Germany have created so many memories – World Cup victory for Sir Alf Ramsey's men, Paul Gascoigne's tears, penalties and that famous night in Munich when it ended 5-1.

This clash for England's youngsters was defined by the fact that Pearce had Gabriel Agbonlahor and Fraizer Campbell suspended, meaning Theo Walcott was the lone striker and had no support.

Germany goalkeeper Manuel Neuer did not make a save throughout the one-sided match, leaving Pearce to rue leaving Daniel Sturridge with the Under-20s.

Winger James Milner admitted the performance was "not good enough".

"The obvious thing is we didn't perform – lots of possession, but we didn't break them down," Milner said.

"The way we qualified for the tournament and then played here showed what a good team we are. But it's all about big games and we didn't perform. Losing's bad enough but the way we lost was not good enough."

Pearce, who it was revealed signed a new two-year deal to lead the team until the next Under-21 European Championships, said he would take his time to analyse the team's failings last night.

"It is down to me to sit back and let the dust settle on this tournament and work out how to improve at this level," he said. "We have to look at all the reasons for the defeat now the tournament has finished.

"I said at the start that it would take 23 players to win it and I stand by that.

"Hats off to the Germans, they beat us 4-0. You have to be humble, but it still hurts me.

"For those players that can play again in two years, hopefully that hurt will stay with them like it did with me when I pulled on an England shirt."