The only thing certain about the next 12 months is that no one is sure how the credit squeeze will play out. Accountancy firms are holding their collective breaths as the fall-out from the financial turmoil of the last months of 2007 becomes apparent. What was once seen as a local difficulty in the US around its subprime mortgage market has now spread across the Atlantic, bringing with it the first run on a British bank since Victorian times. And now fears are growing that the crisis will spread to the 'real' economy.

At the same time, and closer to home, accountants are becoming increasingly concerned over a rapidly changing tax regime. Alistair Darling, the chancellor, did not win many friends over his abolition of capital gains tax taper relief, and the picture still remains unclear.

And even closer to home, the ongoing debate over auditor choice will continue to rumble on, while further consolidation in the accountancy market, particularly in the mid tier, looks increasingly likely.

In fact, as one senior partner put it, the only people smiling at the moment are his corporate restructuring team.

But it is not all doom and gloom. As Mike Sands, senior partner of top 30 firm Menzies, says: '2008 will be a year of opportunity.'

'It's perceived as a year of uncertainty, but we always have years of uncertainty, so successful firms will adapt to meet opportunities rather than uncertainties,' says Sands. He believes that his firm's client base, predominantly owner-managed businesses and SMEs, will be affected by the credit squeeze as banks begin to restrict normal lending facilities. This, he argues, will be an opportunity for firms such as Menzies, as clients will need help to deal with this situation. 'We've seen these problems before; a lot of them haven't,' he points out.

The impact of the credit crunch is being felt at the other end of the scale as well. In particular, the large-scale merger and acquisition market dried up towards the end of 2007. 'The effect of the credit crunch so far has been a virtual stoppage of large, highly leveraged private equity transactions,' says Kieran Poynter, senior partner at Big Four giant PricewaterhouseCoopers, 'and I think most people are saying that this may continue for a while, but it depends on how the credit crunch develops.' Poynter is, however, more optimistic about the level of activity in the middle market, where towards the end of last year he saw deals still continuing to complete.

Poynter's counterpart at Ernst & Young, Mark Otty, can see signs of liquidity returning to the market, though perhaps not to the levels seen at the beginning of 2007. 'Our expectation is that corporate deals will start to gain momentum in the early part of this year and private equity will be back up to speed by the second quarter of the year,' he predicts.

Given that the Big Four earned in excess of £1bn in corporate finance-related work last year, they must be hoping that Otty's optimism is borne out.

However, Otty has his eye set firmly on a bigger picture. 'When I talk to clients and colleagues in China, the Middle East and India, there is a feeling of "what credit crunch are you talking about?"' he says. Poynter agrees, commenting: 'The emerging markets are going like a train.' Otty points to the 'tremendous' levels of capital and liquidity in some of these markets, much in the hands of sovereign wealth funds and other investment authorities. This capital could well inject new life into the corporate market, especially if prices become more keen as a result of the credit squeeze.

There is of course another spin off from the credit crunch that is focusing the profession's attention, a point that is highlighted by John Griffith-Jones, co-chairman of KPMG Europe. 'If things do get tough, and one or two companies go bust, the real test (for the profession) will be whether the accountants come out with their reputation intact,' he says.

Griffith-Jones warns that the coming audit season will be 'very important' for the profession, if it is to show that steps taken since the corporate scandals of five or six years ago have been effective. 'In the past, the first shout was "where were the auditors?" It will be really important that if anything happens, we are proved to have done a robust audit,' he says.

Michael Cleary, senior partner at Grant Thornton, agrees. 'The law of averages would say that if there is a credit crunch that affects the US and UK economies, then naturally there is the prospect of company failure.' Cleary goes on to say that such a failure could create a mini crisis of confidence within the profession. 'This will be quite a challenge for the profession in 2008 as the first reaction is often to go for the auditors,' he says. So must auditors be right at the top of their game in 2008? 'Absolutely,' says Cleary.

Another issue at the front of Cleary's mind is auditor choice. 2007 saw the debate over the market dominance of the Big Four firms in the larger company audit market gain significant momentum - will this be sustained during this year? 'It isn't going to go away,' he says. 'It is firmly on the agenda in the UK, and is getting on the agenda in Europe and the US.' But he does not believe there will be any short-term movement. 'Changing people's perceptions will take a little while. In terms of a big break-through, I think we are a couple of years away,' he says.

Cleary sees that part of the breakthrough will come from stronger international networks, where firms can be part of a more cohesive global organisation. And at the same time, moves to create stronger networks will lead to further consolidation among the firms. 2007 saw Cleary embrace Robson Rhodes, Moores Rowland joined Mazars, while the once-staunchly independent tax adviser Chiltern merged into BDO Stoy Hayward.

Consolidation could be on the cards among the smaller firms as well, according to Sands. 'Some firms have lost their way and have lost their identity trying to be all things to all people,' the Menzies chief says. He adds that the baby boomers running their own practices will also be looking to exit their businesses.

Finally, 2008 looks set to be a year of politics - uncertainty caused by Alistair Darling's moves on capital gains tax, with rumours of U-turns rife in the profession, has done little to endear Darling to UK businesses, to say nothing about the non-domicile community. While final details have yet to be made public, there is no doubt that the government will need to listen to the UK's army of entrepreneurs if it is to rebuild its support. 'Labour will promise adjustments,' Sands believes.

But in the meantime, such uncertainty will create additional work for tax advisers and for most others it's a question of watching and waiting.