Why Cameron will not risk losing friends by leaving EU
David Cameron enjoys watching old films at Christmas. Among his favourites are ones with a guaranteed happy ending, like The Sound of Music and Goldfinger, in which James Bond foils an attempt to undermine the global economy by letting off a nuclear bomb in Fort Knox.
For Cameron, the year is proving to have a happier ending than he expected a few months ago. It is certainly turning out to be a good deal more satisfactory for him than for his unfortunate deputy, Nick Clegg, whose popularity is at a record low.
The two biggest gambles by Cameron during the year have both paid off. The first was the decision to join with France in backing the rebellion against Colonel Gaddafi in Libya; the second was the decision to defy both France and Germany and veto the EU treaty on the euro crisis.
Some euphoric Conservative backbenchers are so enthusiastic about the way Cameron 'stood up' to the combined might of Nicolas Sarkozy and Angela Merkel that they are talking about a 'British Spring' to rival the Arab uprisings.
But their heady hopes of an early referendum on pulling Britain out of the EU completely are not going to be realised. Cameron knows that nothing could be more divisive and damaging than disrupting further the relationships with the other 26 members of the EU.
Instead, as the visit to London by the German foreign minister last week made clear, his intention is now to take every possible opportunity to demonstrate Britain's credentials as a 'good European'.
But Cameron is uneasily aware that neither he nor 'Merkozy' have any real control over the financial crisis that confronts them.
There is deep scepticism about whether struggling countries, such as Greece, can ever hope to trade their way back to solvency at the current value of the euro.
The Foreign Office is drawing up emergency plans to ensure that British tourists and residents in vulnerable countries will be able to get cash to survive if the euro suddenly implodes. This will be a major challenge because there are about a million British expats in Spain alone.
The challenge of imposing austerity to deal with the Budget deficit looks equally daunting but, in spite of the outbreak of riots in some English cities during the summer, the signs are that, with a few face-saving concessions, Cameron will be able to reach a deal with the key public sector unions on pay and working conditions.
The frolicsome relationship between him and Nick Clegg of May 2010, when they formed the coalition government, has long been replaced by a much more downbeat marriage of intermittent convenience.
Poor Clegg has had an awful year. His attempts to transform the balance of electoral power in favour of the Liberal Democrats by introducing a new 'alternative vote' system of proportional representation was heavily defeated in a referendum, while the drama over the EU veto exposed just how far he is being kept away from crucial decisions in Downing Street. He was not told the veto was being used until after the event. One consolation for Clegg is that the Labour leader, Ed Miliband, is also suffering. He and the shadow chancellor, Ed Balls, have failed completely to convince voters that they have a better economic strategy than Cameron and his chancellor, George Osborne.
Compared to the eurozone, Osborne has two big advantages: the pound can go down against other currencies to maintain competitiveness and the Bank of England can create money electronically to prop up the banking system. Unfortunately for all concerned, one inevitable consequence of resorting to these escape routes is that inflation starts rising and the downward pressure on real spending power is now intensifying rapidly.
If George Osborne is obliged to increase VAT again, the social and political fallout would be unpredictable, but nothing like what would happen if the eurozone suffered a break-up.
Economists predict that such a catastrophe could cut output and activity across the UK by as much as 7%. Ironically, as the pressure for democracy and free speech grows in repressive regimes across the Middle East, a major political factor here is the triumph of apathy.
As many as six million people who are eligible to vote have not bothered to put their names on the register - and that includes almost half of all voters aged between 18 and 24.