The outlook for businesses and families in developed economies worsens as governments tighten their spending. Can investors escape the squeeze next year?

Equities are already a mixed bag, suggesting that markets are reacting to the uncomfortable reality that most of the strength from the lows of two years ago has been due to a rebound from excessive pessimism and unrepeatable one-offs -rebuilding of inventories, savage cost cutting and record-low interest rates.

Bonds have been hammered by panic attacks over the sovereign bonds of profligate minor nations, the longer-term consequences of money printing, and policy discord among the bosses of the Eurozone.

Only commodities have remained buoyant, driven by sustained demand growth for energy resources and industrial materials from emerging economies, and the expanding popularity of precious metals as investment assets.