What does 2013 hold in store for us?
Globally, it looks to be another year of modest growth, with huge differences between regions and countries. It's 'make or break' time for the American economy while things look far less rosy over here.
The global picture
Economists at Citigroup are predicting global growth of 2.6% for 2013 picking up to 3.1% in 2014, a little below the consensus and the IMF forecasts, after growth of 2.5% in 2012. Major central banks will probably keep policy loose in the short term, with tightening not until 2015 in the US and rather later in Europe and Japan.
China's economy is cooling somewhat and could expand by about 7% a year but will remain a global powerhouse, accounting for about a third of world growth in coming years. The saying goes: "When America sneezes the rest of the world catches a cold." This also applies increasingly to China.
The Chinese slowdown has been quickly felt elsewhere - for example, the likes of Burberry and Mulberry are already complaining that Chinese shoppers are buying fewer luxury handbags and other designer gear. It will put pressure on other European and American exporters too.
Citigroup reckons US expansion could pick up to 3% from late next year assuming fiscal tightening - i.e. spending cuts and tax hikes - are not too abrupt while the eurozone and UK economies are likely to remain weak in 2013 and beyond.
Consultancy Capital Economics is quite optimistic about the American economy. "2013 could be the year in which a number of factors that have been holding back the US economic recovery are removed," says its senior US economist Paul Dales. "This doesn't mean the economy will soon start firing on all cylinders. But it does mean that the foundations for faster growth in a couple of years' time are falling into place."
He believes that president Obama and US congress will be able to hammer out a last-minute agreement and avoid the much talked-about "fiscal cliff" - a set of spending cuts and tax hikes that could tip the world's top economy into recession. Housing - which was at the epicentre of the recession - is starting to recover and banks have become more willing to lend, including to people with lower credit scores. This will help households buy homes and cars.
Eurozone mired in recession
On this side of the pond, however, things look much bleaker. The eurozone is set to remain mired in recession for the next couple of years and even its best-performing economies, such as Germany, could flirt with recession.
Rather worryingly, Europe's economic powerhouse is no longer immune from the woes of the rest of the 17-nation currency bloc and is clearly losing steam. The Bundesbank shocked markets when it slashed its 2013 growth prediction for Germany to just 0.4% from 1.6%, a day after the European Central Bank cut its forecast for the eurozone to a 0.3% decline from 0.5% expansion.
Triple-dip in Britain?
Before you express any Schadenfreude, think twice. The UK could easily slip into a triple-dip recession in the current quarter and is expected to notch up underwhelming growth of 1.2% (or less) over next year as a whole, following a 0.1% dip this year, according to the independent Office for Budget Responsibility's latest predictions. The public finances are in much worse shape than expected and Britain could even lose its prized triple-A credit rating.
UK house prices - 'The New Normal'
UK house prices are likely to tread water next year, Halifax is predicting. Looking further out, Legal & General and the Centre for Economics and Business Research think the market has bottomed out. Values are set to recover to their 2007 peak of £227,000 by early 2015 and head back to "The New Normal" by 2017 when the average house price could hit £254,000. This will more or less mirror the recovery of the overall UK economy, which is not expected to return to pre-crisis GDP levels until the autumn of 2015.
Borrowing conditions are likely to remain much stricter than before the 2008 crash, and it will typically take up to 10 weeks to sell a home compared with six in mid-2007. The decade of 2010-19 is forecast to have the weakest house price growth seen since the 1950s.
Ben Thompson of L&G says: "Gross mortgage lending is expected to reach £212 billion in 2017 up from the current level of £142 billion but indicators are that it will be more difficult to save for a deposit. Undoubtedly like any period 'The New Normal' will have its challenges but the hope is that following the trauma of the crash what we will have by 2017 is not only a healthier market place but ultimately a more balanced and sustainable one."
UK jobs market
Despite falling unemployment over the summer - which was partly due to a jobs boost from the Olympics and rising numbers of people who work part-time or are self-employed - things are likely to get worse again before getting better.
The think tank IPPR says an extra 200,000 people in Britain could be without a job by this time next year, and the number of youngsters out of work may top a million again. The OBR also thinks the jobless rate will go up over the coming year and peak at 8.3% at the end before starting to fall again in 2014 and reaching 6.9% by the end of 2017.
In the spring Greece's exit from the eurozone was beginning to look like a likely scenario, but it hasn't materialised (yet). The country has been getting by on billions of international bailout funds which have staved off imminent bankruptcy. A recent deal, reached after weeks of negotiation, unlocked the latest tranche of funds and aims to lower the Greek government debt to GDP ratio to 124% by 2020, a slightly less ambitious target than before, but one that nonetheless looks "extremely challenging," says economics consultancy Fathom.
"Even if the required savings were achieved, the troika forecasts still rest on an extremely rosy outlook for growth. Without a rapid and sustained return to growth, of which we see little prospect, Greek debt remains on an unsustainable path," according to Fathom.
Economists at Barclays were more upbeat: "Uncertainties around the US and Greek fiscal outlooks continue to cast doubt on the expected rebound in global economic growth in 2013. That said, we remain of the view that both issues will ultimately be resolved without sparking a severe slowdown."
While the chances of a Grexit have receded, Citigroup still expects Greece to leave the eurozone over the next 12 to 18 months, with a probability of 60%.
Fate of the euro
But even if Cyprus follows suit, the bank doesn't think this will herald a broader break-up of the eurozone.
Interestingly, a report in September found 80% of finance chiefs in some of the largest European and North American firms expected Greece to leave the euro and were preparing to do business with a new currency or possibly currencies in Europe.
Paul Dennis, product manager at advisory firm CEB said: "While the pessimism of CFOs about the euro's prospects of survival in its current form are striking, it is more important that most CFOs are expecting a breakup to be orderly. Only a fifth currently expect a disorderly breakup, meaning most companies expect that with proper preparation they will be able to continue to do business with only limited disruption in a post break-up eurozone."
Some 87% of managers polled by the Association of Investment Companies expect markets to rise next year, compared to 71% last year, with equities expected to be the best performing asset class amongst 86% of managers. Europe and emerging markets are the most favoured regions for 2013. Blue chips have fallen out of favour, though. Many fund managers are tipping financial stocks next year, followed by technology and resources.
It's obviously not going to be plain sailing – all managers are braced for more volatility, but the majority feel the year will end higher than it started. Some 62% expect the FTSE 100 index to end 2013 between 6,000-6,500, whilst 14% expect it to climb to 6,500-7000.
Tom Walker, manager of Martin Currie Global Portfolio Trust, said: "Despite the eurozone muddle and the US fiscal cliff, I suspect the world economy will grow next year but also that we are looking at several years of only low growth rates. Monetary support should keep interest rates low for some time to come. In that low growth, low return environment, global equities seem relatively attractive."