Britain's closely watched austerity program is facing a difficult stretch in which its effectiveness and political viability will be tested, two years after the country became one of the first in Europe to announce tough debt-tackling measures in the wake of the financial crisis, The Wall Street Journal reported. That is because the majority of cuts are yet to come in a program that is due to run another five years.

MF Global's European administrator KPMG is teaming up with PricewaterhouseCoopers, Lehman Brothers's administrator, to try to speed up the return of assets and cash to former clients of both failed brokers, Reuters reported. KPMG said on Tuesday it will work with PWC to establish whether unsecured funds can be "traced" and treated as if they were secured, following a ruling by Britain's Supreme Court.

The National Asset Management Agency’s efforts to sell off British properties outside London by the end of 2013 has been complicated by news that the UK’s commercial property market is in its worst downturn since records began, the Irish Times reported. The value of shops, offices and warehouses is 31 per cent below the September 2007 peak, according to a survey by Investment Property Databank (IPD), while prices fell by a further 0.7 per cent in the first three months of this year.

The U.K. government Monday said it is on track to pass legislation that will protect the retail operations of banks from the banks' more risky investment-bank activities by the end of this parliament in 2015, The Wall Street Journal reported. Ring fencing, as such protection is known, is the central recommendation of the Independent Commission on Banking, a review set up in June 2010 in response to the financial crisis and bank bailouts, shortly after the government came to power. The ICB was charged with finding ways to ensure that the U.K.

The number of people declared bankrupt rose on Friday for the first time in a year, prompting predictions that insolvency rates are set to worsen, the UK Press Association reported. Bankruptcies rose by 5.5% on the previous quarter to reach 9,132, ending a recent trend of quarterly improvements, Insolvency Service figures showed. The number of debt relief orders (DROs), another form of personal insolvency often dubbed "bankruptcy light", increased by 7.3% on the quarter to reach a record high of 7,897.

A trustee for failed brokerage MF Global Inc. has begun litigation in the U.K. that aimed at recovering $700 million in customer funds, according to a statement, Bloomberg reported. The trustee, James Giddens, said in April that he had been working since November to return the money and filed a claim with the administrators overseeing the company’s MF Global UK Ltd. unit. According to today’s statement, an application for direction, which begins the legal process, has been filed with the English court.

A meeting of European Union finance ministers turned a little unruly late Wednesday when George Osborne, Britain’s chancellor of the Exchequer, accused his counterparts of making him look like an “idiot” because he pushed for approval of stricter banking laws, the International Herald Tribune reported. Earlier in the day, Mr. Osborne challenged his fellow European finance ministers to carry out an international accord on raising capital requirements for banks to fortify them against a future crisis or face a hostile reaction from financial markets.

Bank of England Governor Mervyn King said central bank officials are prepared to take unpopular measures to prevent banking excesses from undermining financial stability and economic growth, Bloomberg reported. “Our role will be to take away the punch bowl just as the next party is getting going,” King said in a BBC Radio address Wednesday in London. “That won’t make us popular among bankers, politicians and even at times some of you, and it’s not supposed to.

More than a fifth of Lloyds Banking Group’s Irish residential mortgage book is impaired or unlikely to be repaid in full, it said today, but its impairment charges fell, the Irish Times reported. In a statement Tuesday, the bank said 67 per cent of all its loans in Ireland were classified as impaired at the end of the first quarter. But the lender's Irish impairment charge fell to £526 million (€643 million) from £1.144 billion a year earlier, and £711 million or the last quarter of 2011, it said.

Terra Firma, the private equity group chaired by Guy Hands, is in advanced talks to acquire Four Seasons Health Care in a deal which would value the group’s debt and equity at £825m. The care homes group is seeking to refinance its debt before a September deadline, and a deal could be announced as early as this week, the Financial Times reported. Terra Firma Capital Partners would provide about £300m of equity to Four Seasons, which became the UK’s market leader after the collapse of Southern Cross last year.