People in Britain brace themselves for another difficult year amid fears of thousands more losing their jobs and joining the lengthening dole queue.

From a distance it looks like a poster for a disaster film: a man, panic written all over him, trying to run for his life as flames leap up from an exploding structure behind him. But get closer and you discover that the man is Prime Minister David Cameron and the exploding structure represents 2012. Beneath it, in small print, the caption reads: “And you thought 2011 was bad...”

The cover of New Statesman's New Year issue dramatically sums up the mood in Britain as people brace themselves for another difficult year amid fears of thousands more losing their jobs and joining the lengthening dole queue at a time when the government is clamping down on welfare benefits.

This is the third consecutive year of “austerity” which has already led to swingeing public spending cuts and millions of job losses with little evidence of the promised new jobs in the private sector. Last year, Britain reached the highest level of unemployment since 1996 with 2.64 million Britons out of work, according to the government's Office for National Statistics (ONS). The figure is predicted to touch the three million-mark in 2012. The worst-affected are the 16-24-year-olds, accounting for more than one million of the total unemployed workforce.

Anxiety, anger, pessimism

Not surprisingly, the public mood is one of anxiety, anger and deep pessimism with people said to be less optimistic about their prospects in 2012 than they were at the start of 2011. Britain has been rated among the world's five gloomiest nations with just one in 10 people believing that the economy will improve. It is telling that the demand for anti-depressants and anti-anxiety drugs reported by the National Health Service has risen by more than a quarter since the start of the financial crisis in 2007, and the number of people being treated at government hospitals for “anxiety disorders” is soaring.

The spike is attributed to stress caused by economic insecurity and uncertainty about the future. Experts say the official figures represent only “the tip of the iceberg.” Those in the 35-44 age group, many with young children, are particularly concerned about the future, a Populus poll for The Times revealed. While 60 per cent across all age groups feared that the economy would fare “badly” in 2012, the figure rose to 72 per cent among the 35 to 44-year-olds.

“This suggests growing concerns for families as they contend with the cutback of child benefit for higher earners, changes to tax credits and inflation,” pollsters said as, in a sign of the shape of things to come, Britain was overtaken by Brazil as the world's sixth largest economy amid predictions of a further shrinking of its economy.

Impact on social fabric

After three years of relentless assault on people's living standards, Britain's social fabric has started to tear. Surveys show that the divorce rate is up with grim economic realities beginning to damage personal relations; social unrest, including street violence such as that rocked London and other English cities last summer, is spreading; and there has been a rise in petty crime.

The Archbishop of Canterbury, Rowan Williams, has warned that Britain is losing its moral compass and no longer has a sense of where it is headed as a society.

“The most pressing question we now face, we might well say, is who and where we are as a society. Bonds have been broken, trust abused and lost. Whether it is an urban rioter mindlessly burning down a small shop that serves his community, or a speculator turning his back on the question of who bears the ultimate cost for his acquisitive adventures in the virtual reality of today's financial world, the picture is of atoms spinning apart in the dark,” he said in his Christmas sermon.

Dickensian image

Commentators have invoked the Dickensian image of Victorian Britain to describe modern British society — “a grimy, impoverished society, full of abused children, wrangling lawyers, sadistic teachers and watchful effigies.” The label “Broken Britain” is increasingly attached to Britain, not least by Britons themselves. Indeed, Mr. Cameron was the first to talk about Britain's “broken” society and its “slow-motion moral collapse” when analysing the supposed causes of last summer's riots. He has since returned to the theme frequently citing the banking crisis, the MPs' expenses scandal and the phone-hacking row as examples of “greed, irresponsibility and entitlement.”

“Do we have the determination to confront the slow-motion moral collapse that has taken place in parts of our country these past few generations?” he asked reeling off a catalogue of ills affecting modern British society.

“Children without fathers, schools without discipline, reward without effort, crime without punishment, rights without responsibilities, communities without control, some of the worst aspects of human nature tolerated, indulged — sometimes even incentivised — by a state and its agencies that in parts have become literally demoralised.”

Public attitudes to dealing with the economic crisis highlight deep divisions. The older generation with experience and memories of post-War hardships is calling for a revival of the famous “Blitz spirit” to fight the hardships. But the younger and more individualistic Britons — the so-called “me” generation — are said to have become more selfish. The British Social Attitude Survey, an annual exercise conducted by the independent institute, NatCen Social Research, reveals that Britain has become a less cohesive society.

“Less engaged or willing to make sacrifices for the common good during challenging times, the British public perhaps increasingly sees it as the responsibility of the individual to get through … The signs are of a more fragmented society no longer underpinned by old certainties,” it says.

Even the prospects of the London Olympics trumpeted by Mr. Cameron as an occasion to “look outward, look onwards and to look our best” have failed to cheer many Britons. If anything, its £9-billion cost has caused anger. The Times' writer, Libby Purves, called it a “billion-pound private party” that was tantamount to insulting “normal Britain” which was paying for it. In The Guardian, Jackie Ashley noted that a public haunted by anxiety over the future saw no reason to be optimistic about the Games. “Optimism withers. Pessimism is hunched in every corner, waiting to pounce, and ‘London 2012' will be no exception,” she wrote.

Political uncertainty

A deepening economic crisis has been compounded by an uncertain political situation with the uneasy ruling coalition comprising the Tories and the Liberal Democrats in danger of unravelling any day, given their deep policy differences. For the first time, there is a sense that the coalition may not last its full term until 2015 and the buzz is that “anything can happen in 2012.”

Coming, as they do, from the opposite ends of the political spectrum, it is not surprising that the Tories and the Lib Dems have profound differences on almost every crucial issue — immigration, state benefits, health reforms, market regulation, tax and spending, and, of course, Europe which saw them nearly come to blows over Mr. Cameron's decision to veto a European Union plan to rescue the Eurozone without consulting his Lib Dem partners who want closer relations with Europe. Lib Dem leader and Deputy Prime Minister Nick Clegg retaliated by refusing to endorse the decision saying it was “bad for Britain” and could leave it “isolated and marginalised” in Europe. He went on to accuse the Prime Minister of capitulating to the Tory Europhobes at the cost of the national interest and said Britain would be left “hovering in the mid-Atlantic” as a result of the Tories' “outright antagonism to all things European.”

End of honeymoon

In what was seen as a pointed personal snub to Mr .Cameron, he boycotted the Prime Minister's appearance in the House of Commons only for his own appearance a few days later to be boycotted by many Tory MPs, allegedly with Mr. Cameron's blessings. This was a far cry from the days when the two leaders were hailed for their special personal chemistry and famously known in Westminster as a “couple.” Clearly, the honeymoon is over.

The Opposition Labour party, sensing an opportunity here, is egging on disaffected Lib Dem MPs to bring down the government with senior Labour figures publicly calling for Lib Dems to desert Mr. Cameron and help form a Lib-Lab coalition.

The chances of Labour pulling off a coup are non-existent but that doesn't diminish the scale of the economic and political challenges the Cameron government faces in 2012. That image of Mr. Cameron trying to flee the flames of popular explosion remains an enduring reminder of what lies ahead of him.

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