Dec.27 - Greece, Spain, Italy and even France have been the focus of euro zone debt concerns this year but it's Germany which everyone will be watching in 2013. The bloc's paymaster isn't facing an economic crisis but key federal elections will mark a turning point. Joanna Partridge reports
He's already lost his job once due to the euro zone crisis. But it seems Italy's former Prime Minister Silvio Berlusconi wants to make a comeback. That prospect has made Europe nervous again says Alan Clarke from Scotia Capital. SOUNDBITE: Alan Clarke, European Economist, Scotia Capital, saying (English): "We've made good progress under Mario Monti and since the OMTs were announced the spread between Italian 10-year bond yields and Bunds has pretty much halved. Now we're starting to have second thoughts, if Berlusconi comes back and we undo some of that." In the past two years, over half of the euro zone's 17 member states have waved goodbye to their governments. But the new leaders have also been criticised for kicking the crisis can down the road. In 2012 the bloc returned to recession, unemployment increased and the outlook darkened. So where will the spotlight shine in 2013? SOUNDBITE: Alpesh Patel, Founding Principal, Praefinium Partners, saying (English): "France, because their recent treatment of Lakshmi Mittal makes me think that they are actually going to be anti-investor in their approach and actually they need foreign investment." SOUNDBITE: Bob Parker, Credit Suisse, saying (English): "Spain is very much the focus of all investor attention in the euro zone at the moment." SOUNDBITE: David Jones, Chief Market Strategist, IG, saying (English): "We've seen other countries that haven't been affected, like for example the Netherlands, start to slow down as well so I think that's probably the immediate concern, is just further contraction." They do agree the German federal elections in the second half of the year will mark a turning point. Chancellor Angela Merkel remains extremely popular - her ratings hover around 70 percent and she was re-elected leader of her Christian Democrats party with 98 percent support. Former Finance Minister Peer Steinbrueck will try to unseat her, but few expect a change. Oliver Roth is a Frankfurt trader. SOUNDBITE: Oliver Roth, Close Brothers Seydler, saying (English): "Giving money to the countries they need in the euro zone will be continuously going on, so therefore I think at the end of the road the policy will not change." But recent data shows Germany is no longer insulated from what's going on in the rest of the bloc. And Justin Urquhart-Stewart from Seven Investment Management believes this may spur Merkel to action. SOUNDBITE: Justin Urquhart-Stewart, Seven Investment Management, saying (English): "She's actually going to have to go back to the electorate with some form of policy saying the economy's going to grow. If the Germans have a growth policy that will change the mood music in the rest of the euro zone as well and start moving the policy away from one of just austerity into some growth. That will be a very significant change." That growth is proving hard to cultivate. Greece and Spain's unemployment rate hit 25 percent in 2012. And Madrid continues to keep the markets guessing over when - or even whether - it will ask for a sovereign bailout. But some suggest Italy's political troubles will push up Spain's borrowing costs too. And that can only turn the heat on Europe's leaders even higher.