The group flies to Sydney for Pete and Jo's wedding. David books a hotel room with a view of the harbour in an effort to make a new start with Karen. Impressed by this, she emails Mark to tell him that the affair is over. Rachel meets with her sister Lucy (Susannah Doyle), who tells her she is screening men to father a child with, despite being a lesbian. Adam volunteers his banked sperm but Rachel talks him out of it. Pete meets Jo's rich father, Rod Ellison (Gary Sweet), who tries to pay him off after thinking he is marrying Jo only for the money. Pete flatly refuses. Mark arrives in Sydney, telling Karen he has left Geraldine to be with her. When David tells Karen that he wants the family to move to Australia, Mark reveals the affair, leading to a fight between the two. Adam changes Rod's mind about Pete and the couple prepares to marry. Rachel goes into premature labour and is given a caesarean section at the hospital. At the wedding, Pete is without a best man and the rings, so David and Karen offer theirs. Karen tries to talk to David after the ceremony, but he refuses and flies back to England alone.

Rachel returns, ready for sex, but is worried Adam no longer finds her attractive because of her size. Karen meets Mark at a hotel where he has booked a room. She tells Rachel of her feelings for him and she tells her to do what she has to. At the book launch, Geraldine tells Karen that Mark has had many affairs before this one, though Mark later tells her he will leave Geraldine to be with her. Pete avoids sex with Jo, worried that she will not find him attractive naked. David's boss Natalie tasks him with making a list of redundancies. Hard pressed to come up with a good list, he puts everyone's name down, including his own, but accidentally emails it to the rest of the office. When the head of the company sees it, he fires Natalie and promotes David. When Jo's visa expires, she decides to go back to Australia, thinking he does not like her. He follows her and she proposes to him.

While Rachel visits Jenny in New York, Adam organises a poker night. Everyone leaves but he is still eager to gamble, so he and Ramona visit a casino. Pete buys an MG, which Adam borrows without telling him. On his fantasy joyride he hooks up with an attractive woman and they go back to her place. Pete has reported the car stolen but finds it and drives it home. He winds up being stopped after Adam also reports it stolen. Mark gives Karen a necklace and offers her a permanent job with him, which she refuses. David buys Karen a racehorse for her birthday without realising the cost of upkeep. After trying to offload it on his company he puts it in at Chester, but it loses the race. Jo asks Pete out on a date after she dumps Suggs.

As David moves out of Pete's Jo moves in; after quitting her job she cannot pay rent and her landlord has evicted her. Adam and Rachel show Laura her bedroom and later tell the adoption agent of Rachel's pregnancy. This does not sit well with her and she tells them the adoption cannot go ahead as it is not in Laura's best interests to live with them, devastating them. David and Karen attend a party, where she meets Mark Cubitt (Sean Pertwee), a publisher who asks her to edit a book his wife, Geraldine, is writing. Pete, David and Adam join Jo's aerobics class and Pete and David later go running with her. Pete slowly falls in love with her, but is alarmed when she starts seeing someone, Suggs (Paterson Joseph) from his work. Rachel and Adam see a solicitor about contesting the adoption agency decision, but are resigned to the fact they have to let Laura go.

After the revelation of Adam and Jane's near-affair, Rachel refuses to speak to him, cutting up bunches of flowers he has sent to her by way of apology. David steps in, reminding her that Adam forgave her after she slept with her ex-husband Kris, and that nothing even happened between Adam and Jane. After making up, the two are introduced to Laura, a potential adoptee, and the three bond. Pete's mother Audrey arrives at his house and immediately begins cleaning and cooking for him and David. Jo walks out of her job when she doesn't get a promotion. Pete and David arrive home one evening to find Audrey sitting in a smouldering kitchen. She reveals her memory has slowly been going, and he decides that she should move in with him. After both reconsider, she moves into sheltered housing, taking with her a dog Pete got for company. Josh's standards begin slipping at school, so Karen and David agree that David should come home for his sake. When Rachel begins feeling ill, a visit to the doctor reveals she is pregnant.

David has moved in with Pete after being thrown out of his house. Karen has a girls' night in with an old friend called Bella, and Ramona, Rachel, Jo and Jane. She drinks heavily and insults Bella, while Jane comes close to revealing her the relationship she had with Adam. Rachel is still unaware the following morning when she almost catches Jane, whom she invited to stay the night, groping Adam in the kitchen. Karen takes Pete out on a night of drinking, but leaves him in a bar to go clubbing with the bar owner. Adam decides to tell Jane to leave, but accidentally reveals his relationship to his wife when he finds the two talking. After a violin recital at Josh's school, Karen nearly crashes the car. David berates her for her recklessness and she joins him at his therapy in an effort to get her drinking under control.

Karen's drinking gets worse as she and David fight constantly, so he seeks counselling. Ramona is in demand; the owner of a strip club offers her a job and a nanny position has become available at a neighbour's house. Karen and Jo babysit Little Adam while Jenny tells Pete over dinner that she is taking Owen's PA job after all. Karen leaves early when David does not get home on time and Jenny is infuriated when she finds Jo, a drunken stranger to her, babysitting her child. Ramona hands in her notice, fed up with Karen, but when David sees her working in the strip club, he tells her not to work her notice. Adam and Rachel go to an adoption meeting, where Adam puts his foot in his mouth. Later he sees Jane in town and is horrified when Rachel invites her round for dinner. His ex reveals she followed him to Manchester because she is still in love with him. David's therapy leads him to offer Ramona her job back, but his optimism is ruined when Karen tells him to move out. Jenny leaves for New York with Little Adam.

When Rachel takes up amateur dramatics, Adam becomes jealous but is offered a small part in the play by the director after an angry outburst. At the same time he coaches Josh's football team, after David's sensitive touch has caused a stream of losses for it. Karen and David remain on amicable terms, for the sake of the children, following his affair with Jessica. Frustrated that she will not forgive him, he takes advice from Adam to become the man she has wanted; soon he is quoting Keats at breakfast and watching Spanish films, though only Ramona notices. Jenny and Pete's marriage has changed direction; he has moved back in with the family and she is pregnant and working for a large hotel chain. After a fact-finding trip to Rome the owner of the company offers Jenny a position as his personal assistant in New York. She declines the offer, but her mood changes when her doctor informs her that she has miscarried. Adam and Rachel decide to adopt, while Karen befriends Rachel's colleague Jo.