George Osborne said on Tuesday he would not be able to dilute his austerity programme even though the public finances were doing better than expected, the Financial Times reported. Speaking in London after the official figures were published, the chancellor made a point of saying that lower headline levels of borrowing did not necessarily improve the underlying picture.

The owner of Scotland's largest oil refinery has warned he is not bluffing about threats to close the site permanently this week if 1,300 staff do not agree to pensions cuts, The Guardian reported. Grangemouth, which provides 85% of Scotland's petrol, was shut down last Wednesday in an escalation of a rancorous industrial dispute between Ineos, the plant's owner, and Unite, Britain's largest trade union. Jim Ratcliffe, the chairman of Ineos, said a decision on the site's future would be announced on Tuesday following a staff consultation. "This is not a bluff.

Prime Minister David Cameron’s Help to Buy plan to aid home buyers is the wrong policy for Britain, economists said, adding to criticism of an initiative that was ramped up just this week. Two thirds of 31 economists described the measure as “bad,” according to a Bloomberg News survey published today. The prime minister this month accelerated the second phase of the program, which gives people the chance to buy a home with a down payment of as little as 5 percent. The new phase of the plan has heightened criticism it may fuel a bubble in Britain.

The Help to Buy mortgage scheme threatens Britain’s financial stability by rekindling a housing boom, an influential committee of MPs will warn on Tuesday, even as George Osborne launches the government’s flagship housing policy, the Financial Times reported. Virgin Money is the latest lender to sign up to the programme, the chancellor will announce, as he pledges to deliver to many young people the “dream of owning their own home”.

Britons are benefiting from efforts to mop up a scandal in which banks improperly sold customers tens of billions of pounds of insurance and other financial products over two decades, The Wall Street Journal reported. Although the government has been forcing banks to compensate aggrieved customers for two years already, new claims are still coming in, and at an even-faster clip. That, in turn, has provided a bit of a boost for the moribund British economy, creating tens of thousands of new jobs to handle the claims and putting more cash in people's pockets. U.K.

Pawnbroker Albemarle & Bond (A&B) is in rescue talks with its banks after an attempted rights issue failed on Wednesday, The Guardian reported. Britain's second-biggest pawnbroker admitted that after four months of talks it had been unable to persuade its biggest shareholder, US pawnbroker EZ CORP, to underwrite the proposed £35m cash call. The company is now close to breaching its banking covenants and is "focusing its efforts on constructive discussions with the banks".

Tesco's US chain Fresh & Easy has filed for bankruptcy as the next step of the British supermarket's retreat from across the Atlantic, The Guardian reported. The retailer, which is due to reveal its half-year trading figures on Wednesday, has agreed to sell the majority of its US stores to billionaire Ron Burkle, lending his Yucaipa investment vehicle £80m to take on about 150 stores. A further 33 will close while another 20 remain under negotiation.

Banks in Britain may have to hold more capital than their international rivals under proposals for an annual stress test of lenders put forward by the Bank of England on Tuesday, Reuters reported. The BoE spelled out how it will begin checking for the first time that banks do not pose risks to the UK economy by being short of reserves, both individually and as a sector. It will start an annual test for the top eight UK lenders like Barclays, RBS and HSBC in 2014. The test will be broadened out over five years to include big UK subsidiaries of major international banks, the BoE said.

Some of Britain’s leading mortgage lenders have expressed misgivings about the government’s latest “Help to Buy” initiative, leaving the state-backed banks Royal Bank of Scotland and Lloyds as the only pair to have endorsed the scheme, the Financial Times reported. Help to Buy, launched in April, was originally designed as a government loan scheme to support buyers of new-build houses. But the second phase of the scheme, fast-forwarded to this week from its original launch date of next year, offers a government guarantee for higher-risk mortgages on any kind of home.

Jobless Britons could be forced to do community work to keep their unemployment payments, Britain’s top economics minister said Monday, announcing the latest in a series of moves to tighten benefits rules and crack down on “welfare dependency," the International Herald Tribune reported. Under the plan, those out of work for more than two years could be required to take on tasks like cooking for the elderly or cleaning up litter to keep their payments. The initiative represents a significant hardening of policy in a country that once considered the idea of “workfare” taboo.