Will 2012 be Europe's annus horribilis?

It has been an inauspicious start to 2012. So much so that our first headline, on January 1, read Happy New Year - prepare for recession across Europe in 2012. Since then, we have seen little to raise spirits with European politicians and economists reaching a consensus that the next 12 months will be the toughest we have experienced for decades - if not, generations.

Later this month, credit rating agency Fitch will issue its revised ratings for all European Union member states. There is a significant risk of downgrade for some major nations, something that could spook markets and bond traders further. A European Union summit on January 30 will also try and push forward the fiscal compact proposals, but will it be a case of 'too little, too late'? We know that Britain and Denmark – the latter currently holding the EU presidency – have already promised to fight plans for a European financial transaction tax, unless the levy is implemented globally.

As the head of Fitch's sovereign group David Riley puts it: "With eurozone countries needing to borrow approximately €2 trillion in 2012, the sovereign credit and economic challenges the region faces this year are underlined by the fact that more than half of that debt is by governments at risk of rating downgrades. Fitch is forecasting a shallow recession for the eurozone in 2012 as tough austerity measures continue to bite and consumer and business confidence remains weak. The risk of a vicious cycle of stagnating economies, fuelling worries over the solvency of some governments and banks, is a real one. The outlook is mostly negative for banks in countries like Span, Italy and Portugal."

This year will also see key elections in France, the United States and Russia among others. Voting will, as it always does, align with the economic health of each nation. Therefore, incumbent parties and politicians must be seriously concerned about their ability to stay in office – especially, when anti-capitalist street protests continue across the globe. So can we offer you any New Year cheer for 2012? Is there anything to look forward to? In truth, not really. But nobody can predict the future. A green technology revolution could spur on new economic growth. Demand for European and goods and services from the emerging BRIC countries – Brazil, Russia, India and China – may yet be the saviour for the western world; although, those foundations look to be on shaky ground at this precise moment.

Perhaps, we should take some solace from the fact that 2012 will be a veritable feast of sport in Europe. London will host the Olympics. Meanwhile, Poland and Ukraine will hope to attract new investors on the back of holding the Euro 2012 football championship in newly-built stadiums and transporting supporters around the countries via freshly-constructed transport infrastructure. But beyond the sporting distractions, prospects for the year look to be muted at best. So let us prepare for the worst and hope for the best in what could be an annus horribilis.