Britain does not need to change its current economic policies as recent weak growth and high inflation is likely to be temporary, but a new approach may be needed if these problems persist, the IMF said on Monday, Reuters reported. In an annual report on the UK economy, the International Monetary Fund broadly endorsed the deficit-reduction policies being pursued by the ruling coalition of Conservatives and Liberal Democrats, which the opposition say are causing weaker growth. The IMF said the government should maintain its current course.

Insolvencies in the British construction sector surged in the first quarter, rising for the first time in two years and raising fears that government cuts were hitting the sector harder than first feared, Reuters reported. The number of businesses going bankrupt climbed 19 percent to 948 from 796 in the prior quarter as fiscal stimulus for infrastructure projects dried up, according to a report from Wilkins Kennedy. Government plans to scrap public sector building programmes, such as Building Schools for the Future, has fuelled bankruptcies and fears of a prolonged downturn.

A legal challenge to Britain's financial regulator is delaying disciplinary investigations into Keydata Investment Services, which collapsed in 2009 and sparked one of Britain's biggest personal investment scandals, Reuters reported. The Financial Services Authority (FSA) on Thursday blamed a judicial review by Stewart Ford, Keydata's multi-millionaire founder, for the delay in concluding probes into both Keydata and Ford that were launched in 2007 and 2008 respectively.

Britain's fragile recovery was dealt a severe blow on Wednesday after figures revealed a slump in household spending that could severely restrict growth and knock the government's debt reduction plans off course, The Guardian reported. A shock collapse in business investment in the first three months of the year added to the gloomy picture of a sluggish economy sliding back into recession. Several economists said a downturn in key areas of the economy meant there was unlikely to be an interest rate rise until at least November and possibly next year.

British home improvement retailer Focus DIY is to close with the possible loss of up to 3,000 jobs, after administrators were unable to find buyers for the bulk of its stores, they said on Wednesday, Reuters reported. Administrators at Ernst & Young said they had appointed retail consultants Gordon Brothers to advise on the sale of all Focus DIY's stock with a view to shutting the chain. The closing down sale will begin this weekend.

Wine merchant Oddbins' creditors are likely to be paid just 6p for every pound owed. The chain had proposed a rescue deal which would have paid 21p in the pound, but this was rejected by HM Revenue & Customs, forcing Oddbins into administration, The Scotsman reported. A statement of affairs filed by administrator Deloitte said creditors were now expected to receive less than a third of the return detailed in the rescue propsal, reports yesterday claimed. The retailer now stands at about 48 stores, after some 80 branches were sold or closed.

The government and banks are again at odds, amid fears that their three-month old Project Merlin peace deal is not delivering enough credit support to Britain’s smaller companies, the Financial Times reported. David Cameron warned banks this week to improve their lending to small and medium-sized companies or face new taxes, a threat which provoked an angry reaction in the City. Banks argue they only agreed to provide “lending capacity” of £190bn of gross new corporate loans – including £76bn for SMEs – and that there is little they can do in the absence of demand for new borrowing.

Five of Britain's top banks are backing a 2.5 billion pound fund launched on Thursday to invest in small and medium-sized businesses that are struggling to attract financing, Reuters reported. The Business Growth Fund (BGF), which will target businesses with an annual turnover of 10 million to 100 million pounds, follows the "Project Merlin" deal between Britain and its banks to curb their bonuses and lend more in the wake of a sharp downturn in business lending after the credit crisis.

Future bonus and dividend payments by UK banks will depend upon convincing regulators the handouts will not dent capital reserves or undermine sound risk management, the head of the city watchdog has warned. Banks would also be forced to make public detailed information about their holdings that they currently share only with regulators, Hector Sants told the Financial Times as he prepared to unveil the detailed plans for a new authority that will supervise banks and insurers for safety and soundness.

The Ernst & Young ITEM Club says in a report to be published later Monday that UK retailers face a decade of austerity with consumer spending remaining below its pre-recession peaks until at least 2013, and growth in spending constrained for another seven years, Finfacts reported. The economists using the Treasury's own economic model for the UK economy, say that consumer spending will expand by just 0.6% this year and 1.3% in 2012 as depressed wage growth and rising inflation stretch incomes.