Economics Editor Richard Edgar looks back on 2012

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George Osborne
The Chancellor has failed so far to turn around the economy Photo: PA

I’m only just through my first year at ITV News and 2012 passed in what seems like a blur, pausing only for the Olympics when news seemed to stand still as the athletes ran and a burst of goodwill washed over the country.

The economy also stood still, more or less. 2012 saw us return to a shallow double-dip recession (with a triple-dip in the offing) and efforts by the Chancellor and the Bank of England have failed so far to turn around the economy.

The Government's short-lived 'pasty tax' left a unsavoury taste for some
The Government's short-lived "pasty tax" left a bitter taste with many Credit: PA

George Osborne may want to wallop anyone who reminds him of his short-lived “pasty tax” and a budget which dented his reputation as a master of political strategy.

He isn’t questioning one of the wond’rous mysteries of the year: record employment. Despite a stagnating economy, 29.6 million people have a job - the highest number since records (and the Chancellor) began in 1971. I wonder how long it will last.

Mario Draghi
ECB President Mario Draghi is determined to save the Euro Credit: EMILY WABITSCH/AFP/Getty Images

But as I look back over the past 12 months, I’m struck by how many stories of the year are far from over. Like forecasts of the end of the world, predictions that the eurozone would combust have proven false – so far.

Mario Draghi, president of the ECB, played a blinder in the summer when he announced he’d do “whatever it takes” to save the euro … and then appeared to do just that with a promise to step in if member countries asked for help. None has yet done so.

Euro
The single currency in Europe remains intact... for now Credit: Reuters

But his promise is really just a sticking plaster over deep-seated structural issues in the single currency which may yet split it apart - a deeply destabilising event, the very threat of which is already hurting our own economy. Spain, Italy and even France could be the trigger.

Another, rather more imminent, blow may come from across the Atlantic. The apparent death of bipartisan politics in the US means American lawmakers are incapable of setting aside their differences on the “fiscal cliff”.

The fiscal cliff looms large on the horizon for Barack Obama
The fiscal cliff looms large on the horizon for Barack Obama Credit: Reuters

It’s a package of tax rises and spending cuts cobbled together a year ago to sort out another crisis (oh how they come and go) but in the expectation it would never be brought into law.

That now seems optimistic and the cumulative effect of the package would be to shrink the world’s largest economy by up to four per cent, knocking it into recession and hurting every other country which has anything to do with the US (I can’t think of many which would escape entirely except maybe North Korea).

Democrats and Republicans will need to reach a compromise over the US budget
Democrats and Republicans will need to seek a compromise over the US budget Credit: Reuters

This is obviously a Bad Thing and our main hope is that politicians in Europe have shown that when a crisis really does seem imminent they manage to pull a compromise together at the last minute to “kick the can down the road.” Keep your fingers crossed that the Democrats and Republicans in DC fancy a game of keepie-uppie.

One last development of 2012 which will affect next year and beyond is the appointment of Canadian Mark Carney as the next governor of the Bank of England.

Mark Carney takes over from Mervyn King on 1st July 2013
Mark Carney takes over from Mervyn King on 1st July 2013 Credit: CW/JK

He won’t even take up the job until half the year is gone but his every utterance is already being watched for hints of his thinking and how he might change strategy at the Bank.

By all accounts Mr Carney is a bright chap who carries his talents lightly and communicates easily; I travelled to Canada and couldn’t find anyone with a bad word to say about him. But the hagiographical coverage of his appointment and extravagant expectations do rather set the man up.

In many ways 2013 will be strongly influenced by what has not happened in 2012. Funny, it didn’t seem like nothing at the time.