I think it's safe to say that 2012 was a disaster for the UK as the ConDem govt continued its insane drive to turn us into a minimal-state, free market paradigm of rampant inequality and skeletal public services. The knock-on effect of this austerity drive, coupled with similar attempts across other European countries, was double-dip recession and suffering on a massive scale. Sadly the 2011 Fixed Term Parliament Act ensures we have 2 and a half years more of this lunacy to endure before some form of sane govt can be restored
Ed Miliband and the Labour Party entered 2012 in a bit of a sorry state. The temporary boost from Cameron's farcical "veto" at the EU negotiations at the end of 2011 meant that the Tories were actually in front, or at least neck-and-neck, with Labour in the polls, despite the insanity of their economic policy and the huge cuts being made to public expenditure. In January 2012 there were the beginnings of an open revolt against Ed Miliband from the far right of the Labour Party, masterminded by the neo-Blairite Progress group and its friends in the media (in particular Guardian journalists Patrick Wintour and Nick Watt, and the Telegraph's Dan Hodges). The centre-right Policy Network think-tank published In the Black Labour (neatly caricatured by Compass as "White Flag" Labour), arguing that Labour should give up the fight and essentially accept George Osborne's economic policy lock, stock and barrel. And in January and February, as Eds Milibands and Balls made high profile speeches arguing that a future Labour government would have to accept all the Tory spending cuts, it looked dangerously likely that the right had won and that Labour was a busted flush.
But then the Tories rediscovered their 1990s ability to self-destruct in spectacular fashion with the "budget for millionaires" in March; the 5p-in-the-pound income tax cut for people earning over £150,000 a year, at a time when living costs were rising sharply for everyone else, showed the Tories' true colours. Coupled with the "granny tax" debacle (a relatively minor tax change which nonetheless threatened to become George Osborne's equivalent of the 10p tax abolition fiasco of 2008) and even weirder controversies such as the "pasty tax", the effect was that Labour suddenly leapt 10 to 12 points into the lead in the polls - and have remained there ever since. I think this was the moment when a large number of people suddenly woke up and realised what the Tories were about all along.
The problems for the Tories were compounded by a surge in popularity for the hard-right UK Independence Party - now hitting 15% in some polls - and the continued weakness of the self-immolating Liberal Democrats (below 10% in most polls, except on ICM polls for the Guardian where Alan Rusbridger has an arrangement with the pollsters to boost the Lib Dem figures so that he looks a little less stupid for endorsing them at the 2010 election). The double-dip recession just confirmed the fact that the Tories are at best incompetent and at worst a destructive and dangerous force.
The immediate upshot of this is that Ed Miliband is safe. No-one (except perhaps Dan Hodges) believes that Labour will get rid of Ed this side of the next election. And it looks likely (although far from certain) that Labour will win the 2015 election, particularly because of the one Lib Dem achievement of the coalition is to block the Tories' proposed boundary changes, which makes it considerably more easy for Labour to win even if only a few percentage points in front. My prediction for 2015 is that Labour will poll in the region of 40% or maybe a little more (gaining probably around half the people who voted Lib Dem last time), with the Tories more or less where they were last time (losing some voters to UKIP but gaining some right-wing Lib Dems). I stuck these numbers into the UK polling report swingometer and the result was a Labour majority of 46 - I think it will be a little less than that because the Tories will fight particularly hard in the marginals, and, as in October 1974 (for instance), may be able to limit the swing in some of those marginal seats by pouring everything into them. So, say a majority of around 20-30 seats for Labour.
The problems start there, really. For Labour to get in with a small majority, no economic policy besides being a pale imitation of the Tories, and a substantial right-wing voting bloc of MPs could be a total disaster. And so we look to the policy review, now led by Jon Cruddas, to produce results in this area. That, I think, is going to be the crucial issue of 2013; does the Labour Party have the wherewithal to produce a modern version of something as radical and powerful as its 1973 economic programme, 20 years on? Or are we more likely to get a reheated version of New Labour? I hope for the former but fear the latter.