Martin Wolf: Will the eurozone survive intact?
Yes. The commitment of member governments and, above all, of the European Central Bank to maintain the eurozone looks strong enough to keep it together for another year, at least. The governments of vulnerable countries will continue their austerity drives. The impact will be cushioned by International Monetary Fund programmes in the cases of Greece, Ireland and Portugal and by increasing support from the ECB for all of them, via the battered banks rather than direct intervention in the public debt markets. We can also expect further cuts in ECB interest rates and a weaker euro, both of which should ease the pain.
But the hairshirt approach is not going to work forever. At some point, the eurozone will have to return to strong growth, with relatively high inflation in the core nations, to accommodate the necessary adjustments in competitiveness of vulnerable countries. Austerity forever will almost certainly fail. But what is likely to be the grim austerity of 2012 should still work.
Edward Luce : Will Barack Obama be re-elected?
Yes. It will be a cliffhanger of a race that once again boils down to the electoral college votes of Ohio. In spite of the anaemic recovery, Mr Obama will be assisted by two factors: Republican Mitt Romney’s lack of appeal to Midwestern voters and the late entry into the race of Ron Paul, as the Libertarian party’s candidate, which will peel off enough GOP votes to carry Mr Obama over the line. His wafer-thin mandate and the fact that Republicans will retain control of the House and gain a majority in the Senate mean Mr Obama’s second term will be hobbled from the start.
Roula Khalaf: Will Egypt’s generals give up power?
They already have, even if they don’t yet know it. That is not to say that the army will return to the barracks without a fight – or that the generals will not gain an oversight role and succeed in imposing their red lines on elected institutions. But the new parliament will have a strong popular mandate. So will a president elected in 2012 who will officially take over the military’s transitional powers. One thing the generals have learnt in recent months is that Egyptians know the road back to Tahrir Square and any attempt to disrupt or delay the transition will be met with another wave of popular protests.
Martin Sandbu: Will the sovereign debt crisis hit the UK?
Yes. But that does not mean Britain will default. Instead of the expected recovery, growth has flatlined. That has forced the government to postpone meeting its public debt and deficit targets. Continued stagnation or a second recession could quickly worsen the debt dynamics further and trigger self-fulfilling fears among bond investors. If this happens, the government will be in a bind. It has tied itself so tightly to the mast of austerity that it cannot loosen its policies without scaring the markets. The Bank of England may expand its quantitative easing programme enough to keep gilt yields from soaring. But its help will not look pretty: sterling will fall and inflation will increase. While this will not upend UK public finances, it could sink the government’s re-election prospects.
John Authers: Will the 30-year bull market in bonds come to an end?
Unlikely, even though the rise in bonds will soon hit the limits of both mathematics and logic. Ten-year US Treasury yields peaked at almost 16 per cent in 1981; the downward trend since then is remarkably consistent. It even survived the recent loss of America’s triple A credit rating.
That trend, though, implies that yields will need to go
negative by the end of this decade. And either resurgent inflation, or a dose
of alarm about the US
deficit, could bring the bull market to an end. But the odds are that the
comeuppance can be delayed. Treasuries were the only reliable haven this year;
the Federal Reserve will continue to do its bit to push yields down; and with
the global economy likely to stay anaemic, bonds sadly lack competition.
Roger Blitz: Will Britain win more gold medals at the London Olympics than in Beijing?
No. Playing at home counts for something in most sports, and the Olympics are no exception. Britain won 47 medals in Beijing and there is confidence at UK Sport and the British Olympic Association that this haul will be overtaken, based on the number of world championship or equivalent medals won in Olympic disciplines in 2011. But ask them about gold medal prospects and they are more cautious. The British haul of 19 golds in 2008 was a truly exceptional performance (Britain won only nine in 2004), and this will be tough to match. Fourth place in the medals table – the main goal of UK Sport – is a more attainable achievement.
Chris Giles: Will the global economy grow faster in Q3 2012 than in Q3 2011?
No. The global economy is slowing and the threat of another worldwide recession is rising. European policymakers have demonstrated in 2011 that promises to do whatever it takes to save the euro were merely empty rhetoric. So the euro remains on a cliff edge and a mistake could send it tumbling over. That risk alone is enough to suggest 2012 will be a bad year for the global economy, with the possibility of a catastrophic collapse of the world’s largest economic area. Only if European politicians surprise us all with a comprehensive plan will the natural forces of recovery work to improve the economic outlook by this time next year.
Ben Fenton: Will Britain’s phone-hacking scandal bring new casualties in the media?
Yes. The continuing Leveson inquiry into press standards will coincide with a series of civil privacy actions in the High Court in London starting in February. From March, it is likely charges will be brought against some of those arrested by police investigating the scandal, with trials in the autumn. The civil cases will hit not only the Murdoch-owned News International papers but also the much less robust Mirror Group titles that are part of Trinity Mirror. Rumours are growing that other journalistic “dark arts” – such as landline interception and computer hacking – will soon be revealed.
That, along with the likelihood of a significant downturn in advertising revenues, means the newspaper industry is unlikely to finish the year intact.
Peter Marsh: Will the US begin to close the gap with China in manufacturing?
Yes. The US last year gave up its century-long title as the world’s biggest manufacturing country by output to China, whose climb up the global factory league table has been meteoric. But progress is slowing as China’s rising wage and energy costs make production options – at least for export – less favourable. In the US, local production is growing in response to customers’ desire for quick design changes and rapid delivery of orders. Many US manufacturers have also become more competitive by substituting brain power and capital for labour.
There is little evidence that China has come close to catching up with the US in the most technically demanding end of manufacturing. By the end of 2012, even if the US does not regain the top slot, it will have narrowed the gap with China in its share of world manufacturing production.
Neil Buckley: Will Vladimir Putin reinvent himself as a modernising reformer?
No, but he should. Recent protests over parliamentary election results provide both a spur and an opportunity for Mr Putin to use his third presidential term – which he is still likely to win – to launch badly needed legal, political and economic reforms. A broadening constituency in society is now demanding these and would support them.
But Mr Putin is too shaped by his KGB past, deeply cautious by instinct and prioritising stability above the risks of structural change. It is more likely that he will opt for populist spending increases on pensions, public sector wages and the military, with some superficial tweaks to the political system. He may combine that with closer control over the internet. But the result, with Russia’s society rapidly changing and its growth prospects faltering, could be that Mr Putin will win no fourth term – and may not even make it to the end of his third.
Alison Smith: Will US and UK companies pay out higher dividends?
Yes. Large non-financial companies on both sides of the Atlantic have substantial free cash flow and little appetite to embark on acquisition sprees. Even though the outlook is uncertain, the corporate sector will be reluctant to draw back from progressive dividend policies: if times get hard, other taps will be turned off first. Not every company will pay a double-digit increase, as many will want to pay down debt.
There will also be geographical differences. In the US, the distribution of cash to shareholders is most likely to be skewed towards share buy-backs, since these can be reined in if market conditions change, without the discontent that would accompany a dividend cut. So the average increase in UK dividends is likely to be higher than in the US. But if the eurozone implodes, all bets are off.
Guy Dinmore: Will Italy’s government of technocrats see out 2012?
Yes. Italy’s weaknesses – economic and political – are Mario Monti’s strengths. As he testily told parliament debating his austerity package, he was chosen as a professor of economics to lead a technocratic government in November only because of the “paralysis” of Silvio Berlusconi’s previous centre-right administration. Italy’s emergency is only set to get worse in 2012. More austerity is on the cards. None of the main parties wants to govern in such conditions, and both centre-right and centre-left are divided. Mr Berlusconi may dream of a comeback, but he will wait before deciding whether he dares contest elections in early 2013.
Opinion polls show Mr Monti is twice as popular as his disgraced predecessor. The main parties will let him do the heavy lifting they were never able or willing to do themselves.
James Blitz: Will Israel attack Iran?
No. In 2012, Israel will wait to see how Iran responds to fresh pressures that may force the regime to negotiate over its atomic programme. In January the European Union will stop importing Iranian oil, further undermining Iran’s beleaguered economy. Additional pressure could come if the Bashar al-Assad regime in Syria falls, depriving Iran of a key regional ally. That said, Iran may be in no mood to negotiate. In 2012, it will probably take the big step of enriching uranium. Iran may also retaliate heavily against fresh EU sanctions, describing them as an act of war. All told, Tehran will almost certainly be pressing ahead with its nuclear programme 12 months from now. The year 2013 increasingly looks like the one in which Iran will begin its final race to get the bomb – or be bombed.
Not as such. Oil prices quadrupled in the crisis of 1973-74. To repeat that, they would have to jump from $100 to $400 a barrel. But the world will suffer very high prices in 2012 owing to geopolitical turmoil. The European Union imposed oil embargoes on Libya and Syria in 2011 and is mulling one on Iran, the world’s third largest oil exporter, for 2012. This could push oil prices significantly higher.
Jack Farchy: Has gold peaked?
No. It will take some time for gold to regain its reputation with investors after a violent fall in the final months of 2011. But ultimately that will be restored, if only because they have few alternatives while the crisis continues. Investors need no reminding of the risks elsewhere while US and European politicians dither over economic growth measures and their ballooning sovereign debts.
Most importantly, Asian and Middle Eastern investors – from central banks to sovereign wealth funds – will continue buying lots of gold. Though there may be drops along the way, the gold price in 2012 will surpass 2011’s peak of $1,920 an ounce, rising above $2,000 for the first time in history.
Clive Cookson: Will scientists confirm that travel faster than light is possible?
The scientific bombshell of 2011 was the observation that neutrinos – subatomic particles – had travelled faster than light from the Cern physics lab near Geneva to an underground detector 730km away in Italy. Science fiction enthusiasts rejoiced, because superluminal speeds could lead to travel backwards or forwards in time.
Theoretical physicists, who have regarded the speed of light as an absolute cosmic limit since Einstein published his theory of relativity, suspected measurement error. The question should be settled one way or another in 2012, through further neutrino experiments at Cern and Fermilab in the US. The orthodox prediction is that the discovery will collapse in the face of new evidence but I take the iconoclastic view that it will be confirmed – perhaps even opening the way to time travel via extra dimensions in space.
David Pilling: Will Aung San Suu Kyi still be free at the end of the year?
Yes. Not only that, she is also likely to be a member of parliament. Although she has spent 15 of the past 21 years under house arrest, the new Burmese “civilian” administration of President Thein Sein wants to improve relations with the west. The price for that is political reform. Some of the steps it has already taken – setting up a human rights commission, relaxing censorship and allowing Ms Suu Kyi’s National League for Democracy to stand in elections – are unprecedented. Mr Thein Sein may make further concessions to persuade the west to relax sanctions. He may even be convinced that political reform is an end in itself.
It is too early to declare him the Gorbachev of Burma. But it is too soon to declare that he is not.
Jonathan Ford : Will the UK Conservative party have a civil war over Europe?
No, even though the eurozone crisis has derailed David Cameron’s policy of discouraging Tory MPs from “banging on” about Europe. Worries about the consequences for Britain of closer integration have led to an upsurge of vocal euroscepticism on the back benches. A group of MPs even defied the party whip in November to vote for a referendum on European Union membership.
In theory, this puts Mr Cameron in an awkward spot. After all, the sceptics want to use the desire of eurozone countries to redraw European treaties as a pretext to repatriate powers from Brussels, or to leave the EU entirely. Either prospect would be obnoxious to the pro-European Liberal Democrats, on whose support the coalition government depends.
In fact, the threat is more apparent than real. Mr Cameron’s bulldog-like wielding of the British veto at the recent European summit has both peeled away the less hardline among the sceptics while also sidestepping the need to put a new European treaty through the House of Commons, thus removing one pretext for revolt. Meanwhile, the Lib Dems are unlikely to trigger an election over Europe. With a bit of luck, and in spite of more anti-EU background noise, Mr Cameron can ride out this local difficulty.
