David Cameron has pledged to use the "global drama" of the Olympics and Queen's Diamond Jubilee to help get Britain back on track.
In his New Year message, the Prime Minister admitted that 2012 would be "difficult" as the economy struggles and household finances are squeezed.
But he insisted the coalition "got" the problems and would "do more" to help people through them.
"This will be the year Britain sees the world and the world sees Britain," Mr Cameron said.
"It must be the year we go for it - the year the Coalition government I lead does everything it takes to get our country up to strength.
"The coming months will bring the global drama of the Olympics and the glory of the Diamond Jubilee.
"Cameras and TV channels around the planet will be recording these magnificent events. It gives us an extraordinary incentive to look outward, look onwards and to look our best: to feel pride in who we are and what - even in these trying times - we can achieve."
The premier went on: "Of course I know that there will be many people watching this who are worried about what else the year might bring.
"There are fears about jobs and paying the bills. The search for work has become difficult, particularly for young people. And rising prices have hit household budgets.
"I get that. We are taking action on both fronts. I know how difficult it will be to get through this. But I also know that we will."
Mr Cameron said the Government had "clear and strong plans" to bring down the deficit, which were giving "some protection from the worst of the debt storms now battering the eurozone".
"We have gained security for now - and because of that, we must be bold, confident and decisive about building the future," he added.
"I know much needs to change. We've got to do more too to bring our economy back to health. So we've set out big plans for the transformation of our infrastructure, starting now - with better roads and railways, superfast broadband and new homes."
The Prime Minister said that although much of Europe was struggling, there were "huge opportunities" for UK businesses in other parts of the world.
He promised to be "bold" in sorting out public services and social issues - complaining that "too often our schools aren't up to scratch, our hospitals aren't always clean enough and our police don't catch criminals".
"While a few at the top get rewards that seem to have nothing to do with the risks they take or the effort they put in, many others are stuck on benefits, without hope or responsibility," he said. "So we will tackle excess in the City just as we're reforming welfare to make work pay and support families."
He went on: "I profoundly believe that we can turn these things around. That's what I mean by the Big Society. The British people have got what it takes - and the Government has got the ideas and policies we need.
"As we welcome the world to the best Olympics ever - and as in the 60th year of her reign we honour our Queen as the finest and most famous example of British dedication, British duty, British steadiness, British tradition - let's use these things as a mirror of ourselves too, a mirror of the nation.
"Resilient. Realistic. Intelligent. Curious. Enterprising. Inventive. Unswerving ...
"In every area of life we will find success by being honest with ourselves about the problems, and practical about what lies ahead.
"I know that if we lift our eyes to the other side we have it in our power to come through this stronger, better balanced, focused on what this fantastic country does best."
The leaders of Germany and France used their New Year messages to brace their populations for more tough times.
In a TV address, Chancellor Angela Merkel said "next year will no doubt be more difficult than 2011".
Referring to the sovereign debt crisis buffeting the eurozone, the German premier added: "The road to overcome it remains long and not without setbacks, but at the end of this path Europe will re-emerge stronger from the crisis than it was when it entered it."
She also defended the euro, saying it had made "everyday life easier and our economy stronger".
President Nicolas Sarkozy, who faces a re-election battle this year and has been trailing in polls, said there had to be structural changes to the French economy.
"I know that the lives of many of you, already tested by two difficult years, have been put to the test once more," he said.
"You are ending the year more worried about yourselves and your children."
But he stressed there would be no more public spending cuts after emergency efforts to prevent the loss of France's triple-A credit rating.
The president of Italy, Giorgio Napolitano, said people would have to make more sacrifices to avert "financial collapse" in the country - which is due to refinance billions of euros in debt this year.
"Sacrifices are necessary to ensure the future of young people, it's our objective and a commitment we cannot avoid," he went on.