Britain did not suffer a double-dip recession early last year as previously thought, but household living standards suffered their biggest drop in a generation at the start of 2013. The Office for National Statistics said on Thursday that following a major annual revision of historic economic data, figures now showed that output flat-lined in the first three months of 2012 rather than contracting.

The U.K. government on Wednesday renewed its commitment to austerity by setting out plans for another round of deep spending cuts that will begin in April 2015—a month before the next general election is likely to take place, The Wall Street Journal reported. The wisdom of cutting budget deficits at a time of slow economic growth has been questioned by a growing number of economists, the International Monetary Fund and other international bodies.

U.S. law firm Brown Rudnick has been hired to represent small investors in Britain's Co-operative Bank who are fighting for a better deal in its 1.5 billion pound rescue plan, sources familiar with the matter said, Reuters reported. The bank's parent, the Co-operative Group, is making bondholders swap their debt at a discount of at least 30 percent for new bonds and equity in the bank, which will be listed on the London Stock Exchange. The so-called "bail in", which has been used in bank rescues in Ireland, Spain and Cyprus, has angered many of Co-operative Bank's 5,000 retail bondholders.

Ulster Bank remained silent yesterday on reports that the UK government will consider hiving off some of its problem assets as part of a wider solution to the financial difficulties of its parent group, Royal Bank of Scotland. “We will have to see the proposals before making comment on them,” a spokeswoman told The Irish Times.

Co-operative Bank PLC asked bondholders to take heavy losses to stave off a potential collapse, the latest case in Europe of debtholders, rather than taxpayers, taking a hit, The Wall Street Journal reported. Co-op Bank, part of the Co-operative Group Ltd., a mutual conglomerate with businesses from funerals to supermarkets, said it aims to raise £1 billion ($1.57 billion) in fresh capital this year by offering holders of its £1.3 billion in subordinated bonds a mix of new senior debt and shares.

New bankruptcy legislation aiming to strike a better balance between the rights of debtors and the rights of creditors has been introduced, the BBC reported. The Bankruptcy and Debt Advice (Scotland) Bill 2013 will provide for improved financial advice. It will also ensure that those who "can pay" their debts "should pay". The legislative reform promises to create a more efficient process and allow people to apply for bankruptcy online.

David Cameron’s hopes of agreeing an international deal on fighting tax evasion suffered a blow when Bermuda said it would not commit to a pact before next week’s summit of the Group of Eight leading economies, the Financial Times reported. UK officials fear that if some British Overseas Territories and Crown Dependencies fail to come into line, it could limit the scope for an ambitious agreement at the summit in Lough Erne, Northern Ireland.

Britain will give its strongest indication yet that it is ready to return part-nationalised Lloyds Banking Group and Royal Bank of Scotland to private ownership later this month, political and industry sources said, Reuters reported. Chancellor George Osborne will signal the time is right to offload the government's 81 percent shareholding in RBS and a 39 percent stake in Lloyds in his annual Mansion House speech to financiers on June 19, the sources said on Monday. The government pumped a combined 66 billion pounds into the banks to keep them afloat during the 2008 financial crisis.

Ireland was given a “back-door bailout” worth around £10 billion (€11.5 billion) by Britain in “an arrangement that was never explicitly approved by parliament”, according to a report today, the Irish Times reported. The London Times claims Ulster Bank has accounted for about a quarter of losses since 2008 at the state-owned Royal Bank of Scotland, which is 81 per cent owned by British taxpayers after a £45 billion state bailout five years ago.

Pay and bonuses in Britain's financial services sector remain excessive and encourage risk-taking, according to those working in it, undermining efforts by politicians and regulators to reform an industry blamed for its role in the financial crisis, Reuters reported. Britons struggling in the economic downturn have been infuriated by financial services companies, particularly banks rescued by the government at the height of the crisis, which continue to dole out rewards many times the average wage.