The debate over the outlook of the economy will be overshadowed by the departure of Gordon Brown. The Treasury has locked on an above-trend forecast of 3 per cent for GDP growth. However the City expects growth of just 2.4 per cent. The outcome could have implications for the public finances. The economic cycle that is used to judge the Chancellor's golden rule is deemed to end this spring, so weak growth would make it harder to generate the tax revenues needed to meet it in the new cycle. The housing market will enter the year in rude health, with experts predicting at least six months of double-digit rises. The smart money is for growth to then slow to between 5 and 8 per cent.
D-day for the bulk of the British pub industry will come on 1 July, when smoking in English pubs will be banned. For Welsh pub landlords, the new regime starts earlier: on 2 April. Expect the biggest operators to step up their investment in outdoor smoking areas and spice up their menus in an attempt to lure drinkers through the doors. The other potential big shake-up concerns the new Real Estate Investment Trust legislation, which could see pub groups - essentially just property plays these days - turn themselves into the tax-efficient investment vehicles.
The main event will be the Competition Commission's inquiry into the grocery sector. The watchdog will publish its first views on whether any one player - such as Tesco - is too dominant this month. Its provisional findings will follow in June, with the final report out in November. Meanwhile, Tesco will open its first US stores sometime this year. On the high street, retailers will struggle as consumers rein back spending, with the weakest players getting squeezed by the supermarkets and the internet. UK cybershoppers are tipped to outspend their US counterparts, so the big names will be pumping in millions to improve their websites.
Banks and exchanges
Banking stocks will continue to be volatile as traders push out old rumours about takeoversof Barclays, Lloyds TSB and Alliance & Leicester. The Nasdaq will, just, fail to get its claws on the LSE. It will come back, though, if only because Bob Greifeld knows his company needs the London exchange much more than it needs him. HSBC will have to institute some changes at the top to pep up its desperate share price.
GlaxoSmithKline will have its work cut out to make up for a disappointing 12 months. It is focusing on the launch of Tykerb, a promising lung cancer treatment, and Cervarix, a vaccine for cervical cancer. Jean-Pierre Garnier will step down as chief executive in May next year, but the succession will have to be established much sooner. Analysts expect one of the company's existing directors to take over.
The buzzword is convergence, especially now that BT has unveiled its fledgling TV services. Expect offers on more bundled services, with Vodafone and O2 next to enter the fray. This will put further pressure on prices as Carphone Warehouse, Sky and NTL step up attempts to win both broadband and mobile subscribers.
The name of the game will be consolidation in the life insurance industry. Resolution will come under increasing pressure to pull off another big deal; the longer it waits, the more vulnerable it becomes. In the general insurance market, Catlin's takeover of Wellington could trigger a much-needed spate of M&A activity. The Government's pension reforms will become ever more political as they are thrashed around in Parliament. Towards the year-end, the implementation of the European Markets in Financial Instruments Directive (Mifid) threatens to open up the UK financial services market to greater competition from abroad.
The most interesting story will be how Michael Grade performs as the new head of ITV. He will start on 8 January as executive chairman with a mammoth task to turn around the broadcaster's on-screen performance and entice advertisers back to the network. We will also see if BSkyB, which has become an 18 per cent shareholder in ITV, will live up to its pledge not to interfere in ITV's business. The advertising market will remain tough for companies in "old" media, with little or no growth in ad revenues expected. Online advertising, the bright spark of 2006, will pick up the slack and more.
Steel and natural resources
The £5bn bid battle for Corus between India's Tata and Brazil's CSN should be concluded by the end of January, when final offers are due. Tata needs to substantially increase its offer if it is to see off the Brazilians. At the mining giant Anglo American, Cynthia Carroll will start as the new chief executive in March. She will need to rapidly decide the future direction of the company, as it is also seen as one of the most likely mega-bid targets in the mining sector.Reuse content