German supremacy slowing?

Germany was one of the least affected countries in the world at the height of the financial crisis. It's economy managed to hold up, and even had enough spare cash to bail out every barista in Spain. 

However is their supremacy at the beginning of the end?   

German growth has been higher than the euro-zone average every quarter apart from one, throughout the whole of the financial crisis, however now faces falling into recession, as it anticipates the 3rd quarter growth data. 

Manufacturing is down nearly 5%, the first time it has done this since the height of the financial crisis. A whole 3x bigger than what analysts anticipated. 

Germany is the pin up boy for the euro-zone project, and was the leading economy politically and economically in the project.
However could this now be coming to an end? 

The euro-zone currently faces a deflation and growth problem, and with fears of a German recession, contagion could kick in with FDI flight from the euro-zone, and could see the euro-zone back to square one. 

Germans rely heavily upon exports, with their strong export business with the likes of BMW, Audi and Mercedes at the forefront of that. With global growth being sluggish, and one of their main export partners China experiencing a stuttering of their economy, this could see exports fall dramatically for the Germans in the future.  

However despite these fears, Chancellor Merkel could look for a supply side policy to shift GDP upwards. Germans often complain about the state of their infrastructure such as their roads, railways, water ways and their airports. Thus you could see some investment coming into them soon to try and ramp up their economy, and stump a recession and contagion before it's too late. 

Where is the UK economy at the moment?

Current Status of the UK

The Economics:

The UK has been one of the top performers in the western world, in response to financial crisis. This is after a very controversial austerity package rolled out by My Osborne.  

GDP is still strongly positive, in Q2 at 0.9%, this is compared with 0.8% from Q1.

Inflation is ticking down from 1.6% in July (annually) to 1.5% in September, this is just shy of the Bank of England's 2% target. This represents the fact that the UK's growth is mainly supply side as opposed to demand side. 

Unemployment is still under the sacred 7% that was talked about by Mark Carney, the governor of the Bank of England. It is down 0.4 percentage points from February-April 2014.
The rate is currently 6.2%. 

Despite this 'strong data', investors are still wary of the rate of growth the UK can produce, as it sees a slow down in construction and exports. The trade deficit narrowed from £3.1bn in July to £1.9bn, which was on the back of poor export data.
Economists believe the underlying trend looked bad for the UK, as it looks to rebalance away from domestic demand to selling more abroad.

Markets:

Sterling continues to strengthen against the Euro, and is up 7% over the last year.
This is due to data continuing to be stronger than the Euro average, and continues to look the same over the next couple of years as Europe continues to struggle with growth and deflation worries. 

Additionally cable is up 11%, this is due to rebounding UK growth, and investors are anticipating a rate rise on the back of some more strong manufacturing date in the summer.
The Bank of England look set to be the first central bank to raise rates in the wake of the financial crisis. 

The FTSE 100 struggled to surpass it's resistance at the 7000 mark, which is the pre-crash high. This is contrary to its US counterpart the S&P 500 which smashed through it months ago. Since hovering around this mark, the FTSE has began to down trend, and has been trending down now for a month.
The current close price of the FTSE 100 is 6,294.

This gilt yield curve shows that yields for all government bonds of all maturity dates, have a lower yield that was priced in a week ago and a month ago.
This suggests that investors are becoming ever more uncertain about the likelihood of a rate hike, that they were in the summer.
This is to do with the recent economic date coming out since the summer.

Conclusion: 

The UK economy is still in a strong position, however growth is starting to slow down, and investors are reacting strongly to this with a large sell off of the stock market, and lower yields.
Investors I believe are wary due to the fact Mark Carney did not deliver on his promise to increase the rate at 7% employment, which ask questions about the real state of the economy.
However when the ever anticipated rate hike does happen, I believe business and consumer confidence will be restored, and we may enter a little boom. 

But don't get your hopes up!