Hello and welcome to my first entry for the Huffington Post. Writing for HP is one of my New Year resolutions, as it is something I have been meaning to do for nearly a year. I wanted to start with something that would give readers plenty to agree or disagree with, or even to complain about, so a traditional stab at future gazing seems an appropriate way to begin (the BBC's pundits have their go here).
United Kingdom
1 - Politics will continue to be dominated by the economy for much of the year. The Jubilee and the Olympics will offer a brief respite, but expect many 'are they worth it at a time of hardship' stories in the press. Interest rates will not budge much in the whole year, the economy will grow by only 1-2% or so and house prices will remain stagnant. London will be an exception to both indicators, which will cause political angst in public and a rare bright spot for the Treasury, which needs London to perform to keep revenue flowing.
2 - Indeed, threats by London-based banks to leave the UK (along with £50bn+ of tax revenue) may also start to look less like hot air, particularly if the Chancellor implements the Vickers recommendations without much refinement. The banks will have a champion in Boris Johnson, who will be re-elected in May. Public bank-bashing will continue, albeit without any connection to the reality of what they do or how the rest of the economy benefits.
3 - David Cameron will dangle House of Lords reform at the Liberal Democrats (rather than an EU referendum), much as Blair used fox hunting, in order to pacify them as and when needed. Not much will change, though, in a year that celebrates the Queen's Jubilee.
Europe
4 - Europe will not sink, economically or politically. The EU economy will recover more strongly than largely predicted by the UK media. A mild recession will allow some economies to begin to grow again by the end of the year. German business confidence surveys in December suggested that this might be beginning to happen already.
5 - Whether or not Greece drops out of the Euro, which I think is unlikely, the European crisis needs to be understood as a political situation and not an economic one. The questions are about how it will be tackled, not if, and those are issues of politics - real and perceived. But there will be a solution and it will lead to further integration, not less, even if the solution is offered at several minutes past midnight. This has nearly always been the pattern following previous tension points and Germany will ensure it happens again this time.
6 - Supply-side reforms might be an unintended benefit of the crisis, as would be wide-scale privatisations that would help balance state economies, but these are likely to be unpopular in those countries that would most benefit - in France, for example, where the Presidential elections are likely to drive things in the opposite, nationalistic, direction. In the election, Sarkozy will lose to Hollande and Le Pen will not make the run-off, despite several predictions to the contrary to spice up the press commentary.
Further Afield
7 - In a big year for elections, beyond Europe, those in the US, Russia and China (!) stand out.
In the US, Obama will beat Mitt Romney in the Presidential election. The Tea Party will decline in influence as November nears. Post-Election, the lack of political alignment between the White House and Congress will prevent any meaningful deal on the US budget, which remains one of the largest destabilising factors for the global economy, albeit an unnecessary one.
8 - In Russia, Putin will be elected as President (OK, this is probably the least risky 'prediction' in the whole list) but the continued protests will unsettle him and the government. For Putin, it is one thing to bully former Soviet states, but quite another to clamp down violently on 'real' Russians in Moscow. So, in response, expect more symbolic tussles with the US, particularly over the Middle East, and many more pictures of Putin without his shirt on.
9 - China will show more signs of its new status by using, rather than flouting, global mechanisms from the WTO to the IMF. Expect trade wars - small ones - with the US, but fewer with European nations, where the greater access to local markets and need for Chinese investment will offer the ever pragmatic Chinese better ways of showing muscle. A slowing in the Chinese economy will lessen the scope for machismo (they keep their shirts on) but the (s)election of a new President will mean some showdowns for the sake of reputation building.
The Biggest Story of 2012?
10 - That will be something not listed here.
"Events, dear boy, events" as Harold Macmillan is supposed to have said to a journalist, are what make the headlines and blow things off course. They will again, as the unpredicted Arab Spring did in 2011. We can only hope it is a story that brings positive news and not a terrorist attack or natural disaster that dominates. Compared to some of those possibilities, more drab stories of economic woe seem like a good result.