The euro zone's economy shrank last quarter at the fastest pace since the height of the world recession in early 2009, as a worsening slump in Italy and other southern European countries infected the bloc's core economies of Germany and France, The Wall Street Journal reported. The 2.3% drop in euro-zone gross domestic product in the fourth quarter, at an annualized pace, suggests that Europe's economic and financial crisis is far from over.

The government stepped up its campaign against companies paying less than their fair share of tax when it announced details on Thursday of new rules that may bar corporate tax dodgers from competing for public sector contracts, Reuters reported. Companies bidding for government contracts will have to provide details of their tax compliance history, including tax returns that have been judged incorrect, under the draft new rules. "The government is clear that aggressive tax avoidance is totally unacceptable," Danny Alexander, Chief Secretary to the treasury, said in a statement.

This week’s report by the Organisation of Economic Co-operation and Development on multinational taxation may make uncomfortable reading for some Irish policymakers, the Irish Times reported. This is particularly so when you read the examples given in Appendix C of the report, where the authors describe some corporate structures designed to help multinationals avoid taxation. The structures outlined are familiar to those who read about such matters and know what is meant by the “double Irish” and the “Dutch sandwich”.

The Swiss government ordered banks to hold additional capital as a buffer against risks posed by the country’s biggest property boom in two decades, Bloomberg reported. Banks will be forced to hold an extra 1 percent of risk- weighted assets linked to domestic residential mortgages, the government in Bern said in a statement. Lenders would have to add about 3 billion francs ($3.26 billion) to comply with the new rules, which will be enforced from Sept. 30.

Small retail clients who invested in Spain's nationalised Bankia face substantial losses, with the bank's shares temporarily suspended on the Madrid stock exchange on Thursday morning amid rumours that existing stock would be declared almost worthless, The Guardian reported. The Frob, the country's bank restructuring fund, was forced to admit that the price it will set for swapping debt into shares at the bailed-out bank would be low – but denied reports that it would value shares at just 1 euro cent each.

Europe must move quickly towards completing its banking union with a credible common backstop or risk undermining its new single bank supervisor, the International Monetary Fund said on Wednesday, the Financial Times reported. In a discussion paper setting out a path to overhaul the eurozone’s financial sector governance, the IMF staff warn of the dangers of leaving the project half-finished, either through political compromises or a loss of momentum.

German lighting designer Hess filed for insolvency on Wednesday only months after celebrating its stock exchange debut, deciding an ongoing fraud investigation would scupper any hopes of raising fresh equity, Reuters reported. "After intensive examinations, the management board came to the conclusion that Hess is illiquid, has no positive prognosis of the continuation of the enterprise and the company is, according to the current status of examinations, over-indebted," the company said in a statement.

Europe's common currency has left the continent's southern countries depressed, indebted and struggling to compete internationally. But even in the tumult of Italy's national election campaign this month, the question of euro membership isn't being seriously debated, The Wall Street Journal reported. In Italy, as in Spain, Portugal and other crisis-hit countries, popular support for the euro remains strong.

Household financial distress is at unprecedented levels as seen in the extraordinary rates of arrears in owner-occupied mortgages, according to Central Bank governor Patrick Honohan. Speaking at the bank’s conference on distressed property markets this morning, Mr Honohan said negative equity is not a rationale for debt relief and that the bank will be "ramping up" its contact with financial institutions that have been "behind the curve" in addressing mortgage arrears, the Irish Times reported.

British fashion retailer Republic became the latest casualty of the economic downturn on Wednesday, seeking protection from creditors and putting around 2,500 jobs at risk, Reuters reported. The firm, which operates 121 stores across the UK with a stronger presence in the north of the country, has appointed administrators Ernst & Young to sell the business while it continues to trade. Republic is owned by private equity firm TPG. Ernst & Young said the retailer had been hit by poor autumn trading and a rapid decline in sales in late January.