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.
Javier Blas: Will the geopolitics of oil spark another crisis as in 1973?
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.
