Focus: Good Year Bad Year? (part 1)

How will it be for you? Peace hopes look dismal and the world is running out of water. But there's good news for families and the pound in your pocket. Johann Hari introduces our expert guide to help you negotiate the new year

This has been a year cast in the shadows of the twin towers – from the box office, where we gaped at nightmare visions of the United States being nuked by terrorists (The Sum of All Fears), to the ominous global politics we follow in a way we haven't done since the height of the Cold War. It seems that in 2003 the smoke from Ground Zero will still sting our eyes. Some of our commentators, it is true, are optimistic about next year – but their good cheer is directed towards domestic changes, such as the improving relationships between dads and their offspring.

The wider prognosis is gloomy. The global economy seems to be chuntering to a halt, and there is a danger that governments across the world, unable to do much, will fall victim to the kind of bitter, unpredictable rage battering Gerhard Schröder's administration in Germany.

Although Gordon Brown's spending targets are fixed until 2004, with large boosts for health and education, a depression might yet force him to adjust these downwards, and decisions for the years leading up to the next election are already looming. As New Labour develops the pot belly of middle age, it's hard to imagine Mr Brown and Tony Blair adjusting easily to delivering sombre announcements about public spending cuts. That, in turn, raises the possibility that they will react to falling tax revenues by delighting their MPs and core supporters with tax rises to keep spending high. Interests rates, however, are unlikely to soar, and with money staying cheap, the spectre of recession is likely to be vanquished.

What will change the political landscape is a decision on a euro referendum. If Mr Blair decides against, he will be judged a coward by his most enthusiastic supporters; a victorious Gordon Brown will be the de facto Prime Minister and there will be an audible tick-tick of anticipation for the day the removal vans arrive at No 10.

But if Mr Blair goes for the vote, politics will suddenly be unpredictable in a way we haven't seen since 1992. Mr Blair, Mr Brown, Ken Clarke and Michael Heseltine will take on Lady Thatcher, Tony Benn and Rupert Murdoch in what really will be a fight to the death.

War on Iraq is almost certain. If the 10-day victory expected in Washington doesn't materialise, it will boost those who want a mass movement against the Bush-Blair axis. And after war? Will the US rebuild Iraq, or get the hell out?

The harbingers of the big wars to come are there, too – control of water supplies may come to be as central to geo-politics as control of oil is today. All this, a new archbishop of Canterbury, Prince William's 21st, Ken Livingstone's fate in the balance as congestion charging starts, and a sequel to The Matrix. Fasten your seatbelts: 2003 is going to be a bumpy year.

Glory or fiasco? Welcome to living dangerously

Conflict: First Iraq. Now Korea. Every day we edge closer to war

For Britain, 2003 will be a year of living dangerously. Tony Blair's role as George Bush's trusted lieutenant, both in confronting Saddam Hussein and in the war against the al-Qa'ida terrorist network, could cover the Prime Minister in reflected glory or drag him to disaster.

There is a warning in what happened to another George Bush 12 years earlier. The father of the current President went to war against Saddam Hussein with Britain four-square behind him and scored a stunning victory, only to be brought low by an economy that revived too late. This time the stakes are higher: rather than the simple expulsion of Iraqi forces from Kuwait, the aim is to remove Baghdad's weapons of mass destruction and drive Saddam from power.

Mr Blair will be putting British lives on the line, both in the Gulf and at home. A successful war might bring democracy to the Middle East, trigger lower oil prices and re-invigorate economies across the West, turning George W Bush into a true invincible. Britain's contribution, both politically and militarily, would allow Mr Blair to share that aura.

But there is another possibility: a protracted and bloody fight that dismays other allies, breeds recruits for the terrorist cause, and leaves Mr Blair a victim of the collateral damage as America's love affair with the 43rd President ends. Britain's support for the US has already made it a leading target for terrorists, according to analysts, and a less-than-successful campaign in Iraq could be the catalyst for attacks on "soft targets" here.

Of course, there may not be a war. North Korea, which is expelling UN nuclear inspectors while Baghdad co-operates with them, is arguably a much more immediate threat to peace. But evidence overwhelmingly suggests that, barring an improbable climb-down by Saddam or an equally improbable change of heart by Mr Bush, America will have attacked Iraq by the end of February, with British troops and airmen contributing even if no one else does. Men and weapons are in position. A cocked pistol pointing at the enemy cannot be kept that way for ever. It must be fired, or re-holstered. Mr Bush is more cautious and measured than he sounds, and does not need reminding by Mr Blair that the decision he takes – whether the US plays by the rules of multilateralism and the United Nations, or goes it alone (or virtually alone) in launching an unprovoked war – could set the pattern of international relations for decades. But it will be the President's decision, not that of the Prime Minister, even though he will reap the consequences. For both men it is a question of face, or rather fear of losing it. Can either contemplate the headlines after the decision not to go to war: "Bush blinks" or "Saddam slips free again"? For both climatic and American political reasons, it is now or never. By late spring the desert heat will make it infinitely harder – though not impossible, the Pentagon insists – to fight. But come the cool of next winter, the presidential primary season will be in full swing, effectively ruling out a winter war. So the odds are that a military showdown will come within six weeks or so.

On the battlefield, the US and whoever joins it should prevail easily. The main threat could be at home. While pursuing their war aims, Britons and Americans will have to be careful to avoid letting their guard drop against the threat of terrorism.

"For Britain," says Dr Magnus Ranstorp, a terrorism expert from St Andrews University, "it is more a question of when, rather than if, an attack will take place. British interests abroad, like embassies, are the most obvious target, but if they attack in Britain it is likely to be in London or another metropolitan centre."

Dr Ranstorp does not expect weapons of mass destruction to be used. Rather it will be something smaller, but well-targeted: "psychologically serious but not a lot of casualties".

Security sources say MI5 does not believe an attack is inevitable, but the likelihood is that sooner or later one of the groups related to al-Qa'ida will undertake a successful act of terror in Britain. MI5 believed it had identified and neutralised the al-Qa'ida cells in Britain before the terrorist attacks of September 2001, but 15 months on, it suspects the terrorists have had time to regroup.

The Government is preparing a campaign of "national resilience" to ready the public for a long war of attrition against al-Qa'ida. Every household is to get a brochure on surviving a terrorist attack.

So far Mr Blair has not had to pay the "blood price" of Britain's special relationship with America, in the words he used a year after the 9/11 attacks. The war in Afghanistan was quick and easy, and al-Qa'ida has not done to London what it did to New York and Washington. But in 2003 it may be different.

Rupert Cornwell, Paul Lashmar and Raymond Whitaker

New man tiptoes out of the closet

Families

Mancipation is the cringe word coined by Faith Popcorn, the American predictor of social trends, to refer to men turning into carers and highly involved fathers in significant numbers. In 2003, we will see more evidence that the stereotype of men as absent breadwinners is cracking.

From April, men will be entitled to two weeks' paternity leave, paid at £100 a week. The Government estimates that it will be taken up by 70 per cent of new fathers – half a million a year. Pressure groups such as Fathers Direct rightly point out that, while welcome, this is gesture politics. Mothers are entitled to 52 weeks off, half of it unpaid. Since men continue to have the larger wage packet, the loss of a fortnight's family income is also a deterrent.

In Sweden, even in the 1990s, fathers were given 10 days' paid paternity leave, 60 days' paid leave annually to cover a child's sickness, plus parental leave of over a year, most of it taken at 80 per cent of salary. The crucial difference between Sweden and the UK is that father-friendly proposals are treated not as a labour market problem but as a family policy issue which includes men's involvement.

Even in Sweden, though, men, like women, worry about what the boss will say. A study by the Work Foundation found that in Britain, although 65 per cent of companies provide parental leave, many men fail to take it for fear of marking their card. Timidity is still evident in the low take-up of statutory parental leave – 13 weeks unpaid – granted earlier this year. A fresh measure of whether fathers are becoming bolder will be available from April, when employees with children under six are entitled to ask for serious consideration of a request for part-time work. A MORI poll for the Equal Opportunities Commission shows many fathers assume flexible work patterns are for women. Now, perhaps, the business argument for father- friendly policies, which are proven to push up profits, may become stronger.

Workaholism is being challenged in many areas. Earlier this year, for instance, Suma Chakradarti, a civil servant, accepted promotion and a salary of £120,000 on condition that he could leave work at 5.30 to see his six-year-old. Of course, such decisions are easier for those such as David Beckham and Jude Law who have the cash and clout. Nevertheless, the attention they accord their offspring and the way in which they have redefined "success" are able to create one of many tiny tributaries that can swell into a river of change. There are also schemes in which health visitors work with teenage fathers, and hospitals that encourage new dads to live in.

Inevitably, what will speed change for fathers is an acceleration in the move towards female equality in regard to pay, childcare and flexible work patterns. Once women earn what men do, the issue of who minds the child ceases to be a foregone conclusion.

Yvonne Roberts

At long last, the buck stops here

The euro: Yes or no? In or out? Climb aboard the rollercoaster for referendum day

Here is an admission. At the start of every year it is possible to contemplate the political scene and proclaim that the next 12 months will be "Big and Significant". Politics never stands still. There is always an event around the corner or an election to create a sense of drama.

Here is another admission. At the end of most years the political landscape has not changed as profoundly as the forecasts had suggested at the beginning.

So what? With complete confidence I predict that 2003 will be truly, genuinely "Big and Significant" and that the landscape will have changed in 12 months' time.

The decision on the euro referendum will see to that. Tony Blair and Gordon Brown were right to focus on the economic tests, but wrong to create a cathartic denouement in the first half of next year. After all, the timing of their verdict is arbitrary. Why not this weekend? Why not at three in the morning on New Year's Eve? During the last term, the Prime Minister and the Chancellor wanted to kick the euro into the long grass. In doing so there is now a focus on the single moment when Mr Blair and Mr Brown, with other tensions whirling around them, will decide. "Yes" or "No", their decision will have profound implications. A referendum would transform politics in Britain. A victory would mark the moment when Britain's ambiguous relationship with the EU was finally resolved. Just as dramatically, it would mark a turning point for the Conservatives, a party that has been almost destroyed by its divisions over the single currency.

Equally, a defeat for Mr Blair in a referendum would, in my view, be almost fatal for him. It would severely undermine his authority in the same way that John Major never recovered from Britain's departure from the Exchange Rate Mechanism.

More likely, Messrs Blair and Brown will conclude that the tests have not been met. Look at how cautious the Government was at the end of this year over pensions and transport policy. The Prime Minister does not take risks, although not going ahead with the referendum is almost as big a risk as holding one if the polls point to a defeat. Mr Blair will let a lot of allies down, and himself, if he ducks the decision again. Expect a Third Way solution: not this summer, but another review of the tests before very long, possibly in 2004, ahead of the next election.

The possible war against Iraq involves enormous international risks, but is less precarious for Mr Blair in terms of the domestic situation. The Conservatives are neutered because of Iain Duncan Smith's even more hawkish approach. Most of the newspapers are on board. And as long as the UN is fully involved, there will not be too big an outcry in his own party. On the domestic front the euro is the bigger challenge because the Prime Minister faces a more intimidating opposition, mainly from the media.

The euro will determine the politics of the Conservatives yet again. With Mr Duncan Smith proving to be an inept leader, making no impact in the polls, the party will start 2003 in a restless mood. There is nothing new in this: for the last decade, each year has opened with the Conservatives feeling restless. But their desperation intensifies as time goes on. Allies of Ken Clarke fear he would lose a leadership contest in 2003 at the point when ageing party members cast their vote. The possibility of a referendum makes a pro-euro Clarke leadership more complicated. But he will wait on events. If the Tories were to lose a by-election or perform badly in the local elections, Mr Duncan Smith might well resign or be forced to resign. In my view, it is more likely than not that there will be a change of leadership and the wider electoral appeal of Mr Clarke will prevail. Too many Conservative MPs are saying it cannot go on like this for it to carry on like this for another year.

Will the Liberal Democrats benefit from the turmoil in the Conservative Party and the Government's unavoidably turbulent year? There are some, including several terrified Tory MPs, who predict the Liberal Democrats will soon replace the Conservatives as the main opposition party in the Commons. The electoral system will stop this from happening, but it is quite possible that next year an opinion poll will put the Liberal Democrats ahead of the Conservatives. It is a safe prediction that Charles Kennedy will continue with his fairly successful strategy of being light on policy beyond the one that offers a distinct appeal: the "Charles Kennedy seems like a good bloke" policy.

At the end of 2003 nothing will be quite the same: the Tories will have a new leader, and the euro will have altered the way we perceive Mr Blair and Mr Brown (whether we are in or out), and possibly the way we perceive ourselves.

Lie down in a darkened room for the next few days. Having been on a merry-go-round for the past few years, we are about to leap on to a roller-coaster.

Steve Richards

Back in the last-chance saloon over privacy

The press

Given Cherie Blair's stint on the front pages, self-regulation of the press may not be the most popular cause at No 10. Yet in the fight to stop statutory controls, most newspapers are cautiously confident.

Calls in the Lords for a new body to investigate press behaviour were quashed by ministers, who insisted that self-regulation stays, overseen by the Press Complaints Commission. The PCC is anticipating the arrival in April of Sir Christopher Meyer as chairman. Close to Tony Blair and once John Major's chief press secretary, Sir Christopher is expected to airbrush over the shadow of Sir John Wakeham, who was obliged to step down.

But he takes over a body under attack. While some tabloids have battled with the PCC over ethics, some broadsheets dislike the PCC's apparent preference for mediation and think its operation lacks transparency.

The biggest cloud on the horizon for press self-regulation is the encroachment of the courts on the issue of privacy. This year saw the first use by celebrities of the Human Rights Act to claim invasion of privacy. Although the Mirror won its case against Naomi Campbell at the Court of Appeal, she is due to take the claim to the House of Lords. In January Michael Douglas and Catherine Zeta-Jones, below, will sue Hello! magazine over the publication of their wedding photos. Critics say the Human Rights Act will allow "piecemeal" privacy legislation to emerge, and that a new statute would be easier to operate.

The behaviour of the press in the Soham murders case prompted the Lord Chancellor to review the laws on contempt, and there is trepidation from the press over the Office of Communications, whose jurisdiction might be extended to cover print journalism.

War looms, and papers can look forward to a sales hike. But that will not make up for the worst advertising recession in 30 years. Jane Thynne

Play it again, and again, and again. The sequels are back (and so is Bridget Jones)

Cinema: Hollywood banks on the oldies and goldies

Maybe we're going to watch thoughtful, original, artistically sensitive movies at the cinema in the coming months. But you certainly wouldn't know it from the advance blaring of the publicity trumpets, which have been playing up the usual comic-book adaptations, action-movie sequels and, of course, the third and final instalment of The Lord of the Rings. Harry Potter, meanwhile, is taking a year off.

As far as the Hollywood studios are concerned, the year's first big tent pole will be planted in February with the US release of Daredevil, starring Ben Affleck as the blind Marvel Comics hero, followed a few months later by The Hulk, yet another idea out of the Marvel stable but this time, at least, with a touch of class via its director, Ang Lee.

Otherwise, it's all sequels, sequels, sequels: The Matrix: Reloaded in the summer, followed six months later by The Matrix Revolutions – parts two and three of the futuristic blockbuster starring Keanu Reaves; the second instalment of X-Men, tentatively entitled X-2; a new Terminator movie, called The Rise of the Machines, starring a superannuated and super-well-paid Arnold Schwarzenegger (his pay: $30m); a Charlie's Angels sequel, a Lara Croft Tomb Raider sequel and – if you can believe it – a Friday the 13th sequel combined with a Nightmare on Elm Street sequel entitled Freddie versus Jason.

The thinking person's sequel will no doubt be Bridget Jones: The Edge of Reason, with Renée Zellweger reprising her role as everyone's favourite self-absorbed single Brit, and George Clooney providing the love interest. For kids there will be Dr Seuss's The Cat in the Hat starring Mike Myers, a sort of sequel to The Grinch.

In the sink-or-swim category, meanwhile, will be Troy, a big-budget Homeric epic directed by Wolfgang Petersen and starring Brad Pitt and Eric Bana. It is clearly aiming for the Gladiator niche of digitally enhanced beefcake action; it could also just be laughably cheesy.

So what about the good stuff? It's hard to tell at this stage because many films are still in production. But here are a few to look out for: Cold Mountain, Anthony Minghella's adaptation of the best-selling US civil war novel by Charles Frazier. It stars Jude Law and Nicole Kidman.

Intolerable Cruelty is the latest from the Coen brothers, starring George Clooney, Catherine Zeta-Jones and Geoffrey Rush. It's about a revenge-seeking gold-digger who marries a philandering Beverly Hills lawyer so she can rob him blind in the divorce settlement. The plan goes wrong, of course. Then there's The Company from Robert Altman, who does his ensemble thing with a Chicago ballet company, starring Neve Campbell and Malcolm McDowell.

Wonderland is based on a notorious Los Angeles mass-murder case involving underworld figures and the porn king John Holmes. It stars Val Kilmer and Lisa Kudrow.

Godsend is a Gothic horror story about a couple who try to bring back their dead son. It stars Robert De Niro, Greg Kinnear and Rebecca Romijn-Stamos.

Andrew Gumbel