A ruling from the European Union's top court will force Spain to make it easier for mortgage holders to escape foreclosure by challenging onerous mortgage terms in court, The Wall Street Journal reported. Thursday's decision from the EU Court of Justice could open the door for thousands of Spaniards to renegotiate tough mortgages, but risks hurting Spain's efforts to fix a broken banking sector. Madrid already has asked other euro-zone countries for some €40 billion ($51.8 billion) in loans to prop up local lenders that had bet big on real estate during a decadelong economic boom.

A dispute over the sacking of civil servants has stalled talks between Greece and the “troika” of international lenders, delaying disbursement of €2.8bn in bailout aid due this month amid fears the country’s bailout programme is already veering off track, the Financial Times reported. A joint statement by the European Commission, European Central Bank and International Monetary Fund said: “Significant progress has been made but a few issues remain outstanding.” It added that the mission would return in April after more technical work had been done.

Germany has boasted of its near-balanced budget ahead of Thursday's European Union summit in Brussels, calling itself a model for all of Europe, The Wall Street Journal reported. But German businesses and economists say there is a hidden price tag: Europe's biggest economy has been neglecting investment in its infrastructure for years, hurting the country's potential to grow and create jobs. Germany spends significantly less on public infrastructure than the U.S.

The government has launched a review of pre-pack insolvencies, the controversial practices that can enable companies to dump pension liabilities, Professional Pensions reported. The Department for Business, Innovation and Skills said the review, announced during a parliamentary debate, would begin in "late spring" although a timescale had yet to be set. Pre-packs involve arranging the sale of a business before an insolvency is triggered, with the transaction going through as soon as an administrator is formally appointed.

The UK government’s Insolvency Service is all but insolvent, the Financial Times reported. Experts suggest the group, which polices bankrupt companies, liquidates failed businesses and disqualifies unfit directors, would be broke had it not received an emergency injection of cash from the government. After reporting an underlying deficit of £12m last year, the agency is heading for a deficit of £5m to £7m for 2012-13, according to Whitehall officials.

The lawmakers of the European Union gave austerity a poke in the eye Wednesday by overwhelmingly rejecting the bloc’s proposed budget of €960 billion in its current form, the International Herald Tribune reported. E.U. leaders deadlocked over the seven-year plan in November but finally reached a deal last month after a 24-hour marathon of talks that resulted in spending cuts for the first time in the Union’s history.

There is growing expectation that losses may be imposed on senior bank bondholders as part of the imminent Cypriot bailout, despite a similar option being withheld from Ireland as part of the €64 billion Irish rescue package. Forcing bank bondholders to take a write-down on their debt is under active consideration by euro zone officials, according to a well-placed euro zone source. Depositors in Cypriot banks may also suffer writedowns, the Irish Times reported.

The Bank of England warned on Thursday that the next phase of the UK's six-year financial and economic crisis may be triggered by the collapse of debt-laden companies bought by private equity firms in the boom years before the crash, The Guardian reported. In its latest quarterly bulletin, Threadneedle Street said the need over the next year to refinance firms subject to heavily leveraged buyouts posed a systemic threat.

Germany’s Bundesbank nearly doubled its already large risk provisions for 2012, saying Europe’s sovereign debt crisis was not over and urging central banks to stay away from fiscal policy, the Financial Times reported. The Bundesbank added €6.7bn to its provisions, bringing them up to €14.4bn, the bank said in its annual report published on Tuesday. The increase partly reflected the risk it perceived in holding the sovereign debt of countries hit by the crisis such as Spain, Italy and Greece.

Germany is growing wary of saddling bank-account holders with losses as part of a rescue for Cyprus and no longer insists on a financial contribution from the International Monetary Fund, a close ally of Chancellor Angela Merkel said, Bloomberg reported. Michael Meister, deputy parliamentary floor leader of Merkel’s Christian Democratic Union party, floated concessions that would hasten the wrap-up of nine months of aid talks and lessen the risk that a financial accident in Cyprus, which makes up barely 0.2 percent of the euro-zone economy, could revive European market turbulence.