Four years ago, Stephen Hester was cast as the savior of Royal Bank of Scotland Group PLC as it was being bailed out by U.K. taxpayers. Now the 51-year-old chief executive may risk having his tenure cut short by the latest scandal to hit the state-owned lender, The Wall Street Journal reported. RBS is negotiating a settlement with authorities investigating attempted interest-rate rigging at RBS and other banks, and a deal, including fines, could be announced in the next few months, according to people familiar with the matter.

U.K. firms were gloomier about their own prospects in July, as the global outlook for trade deteriorated while the euro zone's debt crisis deepened, a trend that signals the country's economy could weaken further in the third quarter, a survey by Lloyds banking Group showed Monday, The Wall Street Journal reported. Hiring intentions among U.K. firms also fell and more companies were downbeat about expected profit margins, the survey showed.

The high street continued to be one of the areas of the economy most affected by the slowdown in growth in the UK, as data showed that the number of retail insolvencies rose 10.3 per cent last quarter even as the overall number of companies failing dropped, the Financial Times reported. There were 426 retail insolvencies recorded for the three months to June 30, according to research by PwC, compared with 386 in the same period in 2011. Retail insolvencies accounted for over a tenth of the overall number of corporate insolvencies in England and Wales recorded in the period.

The U.K.'s economy suffered a much larger contraction than expected in the second quarter, heightening questions about the pace and effectiveness of the government's austerity program and fueling the broader debate across Europe about how to tackle the Continent's economic woes, The Wall Street Journal reported. The deteriorating British economy is likely to intensify this debate both within the U.K. and other debt-laden countries in the West about cuts versus stimulus amid increasing evidence that austerity is proving a major drag on growth.

The economic impact of sodden summer was laid bare on Thursday by dire news from major retailers showing that torrential rain had hurt already weak demand in an economy showing few signs of pulling out of recession, Reuters reported. Shops selling everything from home-improvement items to sportswear and goods for mothers and babies were hit. Official retail data also indicated that celebrations to mark Queen Elizabeth's Diamond Jubilee failed to provide the much hyped and hoped-for boost to spending, raising the question of whether the London Olympics will get the shop tills ringing.

MF Global's European administrator KPMG has won the backing of the British High Court to return 54 million pounds ($84 million) of client assets next month in an early victory for creditors seeking over 1 billion pounds of assets, Reuters reported. KPMG, made special administrator when the broker collapsed in October last year, said on Wednesday the High Court had approved its distribution plan, meaning the administrator can start returning the assets on Aug. 1.

Britain's banks have been told to test how they would cope if several euro zone countries exited the single currency, the UK's Financial Services Authority watchdog said on Tuesday, Reuters reported. FSA Chairman Adair Turner said Britain's banks needed to think about problems arising from their assets and liabilities being redenominated into another currency, even though the likelihood of this happening was still small. "We've certainly encouraged them to run those scenarios for Greece, Spain, Italy, Portugal and Ireland," Turner told parliament's Treasury Select Committee.

More than a quarter of shops and a fifth of hotels are at serious risk of going out of business in the next year, according to the trade body for insolvency professionals, DailyRecord.co.uk reported. Research by R3 found 274 retail businesses and 30 hotels had a high risk of going bust within the next 12 months. Analysis showed there are a further 1238 retailers and 137 hoteliers who are vulnerable to failure over the same period. This means that 26.15 per cent of retail businesses and 17.99 per cent of hotels in Scotland are at some risk of failure.

Britain's growth prospects for the next two years have worsened more than those of any other big advanced economy over the past three months, the International Monetary Fund said on Monday, Reuters reported. The sharp downgrade chimes with other economists' darkening assessments, and the IMF said it was too soon to say if a recent flurry of official measures to stimulate growth would be enough, or if the government will have to ease back further on its fiscal austerity plans.

Royal Bank of Scotland Group Plc, Commerzbank AG and Standard Bank Group Ltd may be betting Dubai will improve terms on a $10 billion debt restructuring to protect its reputation after a near default in 2009, Bloomberg Businessweek reported. The banks walked away from talks with government-owned Dubai Group after 18 months without an accord, two people familiar with the situation said July 9. The banks disagreed with demands for loan maturities of 12 years, one of the people said, asking not to be identified because the negotiations aren’t public.