Updated: Jan. 13, 2012

In May 2010, David Cameron, the leader of the Conservative Party, became prime minister of Great Britain, bringing a 13-year run of Labour Party rule under Tony Blair and Gordon Brown to an end. Mr. Cameron leads an uneasy coalition government with the center-left Liberal Democrat party.

While Mr. Cameron has dominated the political scene, his time in office has been marked by rising discontent over a struggling economy and the deep cuts of his austerity program. Mr. Cameron’s standing was also tarnished by a phone-hacking scandal that brought the media, government and police all into disrepute. And Britain’s traditional role as one of Europe’s leaders may have been irrevocably diminished, as the country became a bystander to the sovereign debt crisis. Its refusal to join a new pact on fiscal integration raised the prospect of the European Union breaking into separate tiers, with Britain on the periphery.

After Mr. Cameron’s narrow victory, he moved briskly to reshape the government, pushing through an austerity program of sharp spending cuts despite mass protests. The program reduced costs in government departments by almost 20 percent, sharply curtailed welfare benefits and eliminated hundreds of thousands of public sector jobs while raising taxes.

The country’s weak economic recovery stalled, a situation many economists blamed at least in part on Mr. Cameron’s austerity measures.

In March 2011, Mr. Cameron took the lead, along with French President Nicolas Sarkozy, in committing forces to the most aggressive European-led military venture in years, an air campaign in Libya. Although the mandate from the United Nations was to protect civilians from the government of Col. Muammar Qaddafi, the intervention grew into an open-ended air campaign in support of the rebel government.

In July 2011, the prime minister faced an unexpected challenge from a different front when Britain’s Parliament collectively turned on Rupert Murdoch, the head of News Corporation, and a prominent Cameron supporter, using a debate about a widening phone hacking scandal to denounce reporting tactics by newspapers once seen as too politically influential to challenge.

The scandal raised questions about Mr. Cameron’s character and judgment in cultivating multiple ties to News International, Mr. Murdoch’s British subsidiary, which helped put him in office but which is currently almost universally condemned. 

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In August 2011, rioting and looting convulsed the poorer sections of London and spread to other British cities. After three nights of chaos and near-anarchy, Mr. Cameron flooded the streets of London with 10,000 extra police officers. But a night of relative calm in London was offset by an apparent surge of violence in other regions, and Mr. Cameron threatened sustained police measures including the possible use of water cannons to curb the looting and arson.

On Nov. 30, hundreds of thousands of British workers walked off their jobs in a demonstration of mass fury at government austerity measures. The one-day strike was the biggest since the 1970s, when waves of labor disputes all but crippled the country. This time, the immediate issue was Mr. Cameron’s proposal to require public employees to work for more years and pay more toward their pensions each month.

The strike came just a day after Britain’s chancellor of the exchequer announced that due to a worsening economic outlook public employees’ wages would be frozen for two more years, on top of an existing two-year freeze. He also said that new budget cuts meant that the public sector would lose hundreds of thousands more jobs than he had previously said, and warned that if Europe slides into recession again, Britain would likely follow.

A Bystander to Europe’s Crisis

On Dec. 8, 2011, European leaders gathered for a summit meeting on the euro in Brussels. But, no matter what the outcome, Mr. Cameron’s coalition government was doomed to be cast in the role of impotent bystander, torn between anti-Europe forces and European leaders’ moves toward greater fiscal integration on the Continent — with or without Britain.

Meeting until the early hours of Dec. 9, the leaders agreed to sign an intergovernmental treaty that would require them to enforce stricter fiscal and financial discipline in their future budgets. But efforts to get unanimity among the 27 members of the European Union, as desired by Germany, failed as Britain refused to go along.

All 17 members of the European Union that use the euro agreed to the new treaty, along with six other countries who wish to join the currency union one day. Hungary, Sweden and the Czech Republic left the door open to sign up, leaving Britain isolated.

The outcome was a significant defeat for Mr. Cameron, who had sought assurances to protect Britain’s financial services sector in exchange for doing a deal.

At 10 Downing Street, there has been looming recognition that if the euro falls, Britain would sink along with everyone else. But if Europe manages to pull itself together by forging closer unity among the 17 euro zone countries, then Britain faces being ever more marginalized in decisions on the Continent.

Many Europeans were irritated by British Conservatives’ quiet satisfaction throughout the crisis with the decision not to join the euro (the United Kingdom ostentatiously kept its currency, the pound), particularly when juxtaposed with the panic over Britain’s inability to have any significant impact on Europe’s biggest crisis since the end of the cold war.

Mr. Cameron told a fractious Parliament that his main goal in Brussels was to “protect our own national interest” by resisting measures like a proposed financial transaction tax. But such Britain-centric rhetoric has annoyed the brokers of Europe’s future, Chancellor Angela Merkel of Germany and President Sarkozy of France, who have not been shy about expressing their frustration. Recently, after Mr. Cameron tried to inject himself into talks about the euro, Mr. Sarkozy said, “We are sick of you criticizing us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings.”

Concerns About the Coalition

On Dec. 11, Mr. Clegg told the BBC that Britain was left in danger of being “isolated and marginalized” in Europe. Mr. Clegg added that if he had been in charge, “of course things would have been different.”

Mr. Clegg, who normally sits next to Mr. Cameron on the front bench of the parliamentary chamber, was conspicuously absent during Mr. Cameron’s remarks the next day.

Many euroskeptic Conservatives, who want Britain to renegotiate its relationship with the European Union, were hailing the outcome of the Brussels summit as a victory. But several officials suggested that both the Conservatives and the more pro-European Liberal Democrats wanted to avoid a widening of the rift between them.

Mr. Clegg said he did not want the coalition government to collapse.

Sanctions Against Iran 

In early November 2011, United Nations weapons inspectors issued a report that presented a trove of new evidence that made a “credible” case that “Iran had carried out activities relevant to the development of a nuclear device” and that the project may still be under way.

In response to the report, the United States, Britain, Canada and other Western powers on Nov. 21 took significant steps to cut Iran off from the international financial system, announcing coordinated sanctions aimed at its central bank and commercial banks. The measures tightened the vise on Iran but still fell short of a blanket cutoff.

The Iranian government denounced the moves, but focused much of its ire on Britain, moving to downgrade diplomatic relations. On Nov. 29, dozens of Iranian protesters screaming “death to England!” stormed the British embassy compound in Tehran, tore down the British flag and ransacked the office in what appeared to be a pre-orchestrated event sanctioned by the Iranian authorities that may have gotten out of control.

The next day, Britain deepened Iran’s isolation by closing its embassy in Tehran, withdrawing all its diplomats and ordering the Iranians to do the same at their London diplomatic mission within 48 hours, escalating the most serious rupture of relations in decades. At least four other European countries — Norway, Germany, France and the Netherlands — also moved to reduce diplomatic contacts with Iran.

The European Union announced tightened sanctions against Iran, adding 180 Iranian officials and companies to a blacklist that freezes their assets and bans travel to member states. But the measures fell well short of demands by Britain and France for an embargo on oil purchases from Iran, one of the world’s leading producers.

More on the London Riots

The convulsion of violence prompted widespread criticism of what many people saw as an initially ineffective police response and of tardy actions by political leaders, many of whom, including Mr. Cameron, seemed too slow to break off summer vacations to confront events that escalated rapidly into his most serious political challenge since taking office.

Seeking to reestablish his authority, Mr. Cameron told an emergency session of Parliament on Aug. 11 that the authorities would consider curfews, filling some police functions with soldiers to keep more officers on the street and constraining smartphones and social networking sites. The proposed restriction of social media has earned especially harsh criticism for Mr. Cameron, with critics charging him with censorship and hypocrisy for suggesting free-speech limits that he decries in undemocratic countries.

The mayor of London and an array of British police officials publicly opposed Mr. Cameron’s proposal that William J. Bratton, a former police commissioner in Boston, New York and Los Angeles, be recruited to sort out the capital’s policing problems. However, faced with such stiff opposition, Mr. Cameron ended his bid to enlist Mr. Bratton,  suggesting instead that Mr. Bratton come to Britain in the fall as an unpaid consultant, a suggestion Mr. Bratton accepted.

Radically different speeches by Mr. Cameron and Ed Miliband, the leader of the opposition Labour Party, appeared to set the stage for the kind of gloves-off, left-versus-right politics Britain has not seen since Margaret Thatcher’s heyday in the 1980s. Both in their early 40s and both previously characterized by cautious efforts to command the center, the two men signaled that the riots had girded each of them for a new battle that could determine Britain’s future for years.

As British leaders across the political spectrum maneuvered for position after the riots, new evidence of the ferocity of the unrest emerged Aug. 16 as the police charged a 16-year-old boy with murder following the death of a 68-year-old retiree attacked during the turmoil. On the same day, Deputy Prime Minister Nick Clegg announced that convicted rioters and looters would wear orange jumpsuits and help clean up areas affected by their actions, as part of a “riot payback scheme.” He also said an “independent communities and victims panel” would be established to examine the causes of the widespread violence, burning and looting that left scars across London and several other major cities.

Recession Worries in the New Year

On Jan. 12, 2012, the Royal Bank of Scotland announced a round of job cuts, saying 3,500 positions would be eliminated at its investment banking division over the next three years to reduce costs. It was one of several signs that day indicating that the British economy might be heading for a recession, or be in one already.

The retailer, Tesco, warned on Jan. 12 that profit growth in 2012 would be “minimal” after a disappointing holiday season. The chain, which is the world’s third-largest retailer after Wal-Mart Stores and Carrefour, said it was caught by surprise by consumers’ reluctance to spend and by aggressive price cuts at rivals.

In addition, Home Retail, Britain’s largest household goods retailer, warned of a “significant” cut in its full-year dividend because of a sales slump. Mothercare, a baby clothing retailer; Thorntons, a chocolate maker; and Halfords, the car parts retailer, reported weaker sales figures and warned of a challenging business environment ahead.

An Investigation Involving Ties to Libya, Torture

In January 2012, British officials announced that they had ordered a criminal investigation into the role played by MI6, the country’s secret intelligence service, in operations that led to two Libyan opponents of Col. Muammar el-Qaddafi being delivered to Libyan jails, where, they said, they were tortured by Colonel Qaddafi’s secret police.

A statement issued by the Crown Prosecution Service and Scotland Yard said that the investigation would delve into two allegations of British involvement in the American-run process of so-called extraordinary rendition of terrorist suspects during the Qaddafi era, saying they were “so serious that it is in the public interest for them to be investigated now.”

One of the two Qaddafi opponents involved was Abdul Hakim Belhaj, who survived the Libyan interrogations and is now head of the Tripoli Military Council. A former leader of the Libyan Islamic Fighting Group, which American officials suspected of links to Al Qaeda, Mr. Belhaj is now one of the most powerful figures in the Libyan interim government.

Mr. Belhaj said he was suing ministers in Britain’s former Labour government and officials of MI6 for the part he said they played in sending him and his wife to Libya in March 2004 after they were arrested in Bangkok, where they had been lured on promises of asylum in Britain. He has claimed that he and his wife were forced, shackled and blindfolded, onto a 17-hour flight to Tripoli, and that he was taken to the most notorious of Colonel Qaddafi’s prisons and subjected to vicious beatings and other abuse.

The second case involves Sami al-Saadi, another Libyan dissident during the Qaddafi years, who said that he, along with his wife and four children, was seized in Hong Kong in 2004, while traveling to Britain in the hope of gaining asylum, and forced onto a plane to Tripoli in an operation that, he has said, was mounted by MI6 in cooperation with Libya’s intelligence service. 

Mr. Saadi, too, said he was tortured. Both men have cited a cache of secret documents recovered from the Qaddafi government’s intelligence files after the fall of Tripoli to rebel forces, which included letters that appeared to implicate British officials in cooperating with Colonel Qaddafi’s agents. The allegations date to a period when former Prime Minister Tony Blair reversed decades of Western hostility to Colonel Qaddafi after the Libyan leader renounced support for terrorism and gave up ambitions to acquire unconventional weapons.

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