Not so happy new year: Cameron greets 2012 with a reality check

Britons urged to 'go for it' – but last year's optimism is replaced by effort not to appear out of touch

A year ago in his New Year's message David Cameron predicted that 2011 could be the year that Britain got "back on its feet". But yesterday the Prime Minister struck an altogether less optimistic tone in his annual missive to the nation.

Acknowledging that many people were "worried about what the year might bring", Mr Cameron said he did not underestimate how bad the economic situation was and would continue to be.

"I know how difficult it will be to get through this," he said. But the forthcoming Olympics and Diamond Jubilee gave Britain "an extraordinary incentive to look outward" and "feel pride in what we can achieve".

"This will be the year Britain sees the world and the world sees Britain. It must be the year we go for it – the year the Coalition Government I lead does everything it takes to get our country up to strength."

With internal polling by both Labour and the Conservatives showing that Mr Cameron is vulnerable to the charge of being "out of touch" with ordinary people, the Prime Minister insisted he understood the economic hardship people were facing.

"Of course I know that there will be many people watching this who are worried about what else the year might bring," he said.

"There are fears about jobs and paying the bills. The search for work has become difficult, particularly for young people. And rising prices have hit household budgets. I get that."

And shamelessly adopting Ed Miliband's demand for responsibility at both the top and bottom of society, Mr Cameron added: "I will be bold about working to cure the problems of our society. While a few at the top get rewards that seem to have nothing to do with the risks they take or the effort they put in, many others are stuck on benefits, without hope or responsibility. So we will tackle excess in the City just as we're reforming welfare to make work pay and support families."

He reprised his belief that a Big Society could transform Britain. "Too often our schools aren't up to scratch, our hospitals aren't always clean enough and our police don't catch criminals. Brilliant and committed people work in public services – but somehow the system stops them doing their job. So we'll change it. I profoundly believe that we can turn these things around."

Mr Miliband intends to capitalise on Mr Cameron's "out of touch" image by campaigning on rising rail and energy prices. Labour sources suggested the party would also be campaigning on high credit card charges and care homes run by companies backed by private equity.

Welcome to 2012: leaders' words of wisdom

Angela Merkel, Germany

"Despite all troubles, we shall never forget that the peaceful unification of our continent is a historical gift for us. It has brought us more than half a century of peace, freedom, justice, human rights and democracy."

Nicolas Sarkozy, France

"2012 will be a year full of risks but also full of possibilities. Full of hope, if we know how to face the challenges. Full of dangers, if we stand still."

Vladimir Putin, Russia

"I want to wish all of our citizens, independent of their political leanings – those who sympathise with the forces of the left, and those on the right, those on top and those below, as you like – happiness and prosperity."

Barack Obama, USA

"There's no doubt that 2012 will bring more change. And as we head into the new year, I'm hopeful that we have what it takes to face that change – to grow our economy, create more jobs and strengthen the middle class."

Official statement from North Korea

"The whole party, the entire army and all the people should possess a firm conviction that they will become human bulwarks and human shields in defending Kim Jong-un unto death."