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.

Britain has sued the European Parliament and European Union member states over a controversial plan to cap bankers' bonuses, in a last-ditch effort to block the legislation before it enters into force next year, The Wall Street Journal reported. The legal challenge was filed with the EU's top court, the Luxembourg-based European Court of Justice, "in the past couple of months," the court's press division said Wednesday. It follows a series of victories for the U.K. over financial services legislation as the country seeks to claw back powers from Brussels. In its lawsuit, the U.K.

Punch Taverns’ attempt to restructure its £2.3bn net debt will take on a new urgency as looming deadlines focus the minds of bondholders and the company itself, according to the pub group’s executive chairman, the Financial Times reported. Punch said it remained hopeful of launching a consensual restructuring of its heavy debt burden this year, as it posted a 68 per cent drop in annual pre-tax profit. Stephen Billingham, executive chairman, said: “We now have a short runway. When you have a long runway, people don’t focus their mind.

The Bank of England's Financial Policy Committee, formed to spot budding crises, has its eye on the U.K.'s housing market, The Wall Street Journal reported. In its first public comments on real estate, the committee said Wednesday that it would be "vigilant" to potential risks as banks step up mortgage lending and house prices rise. Real estate has long been a hot topic on this property-conscious isle, but in the wake of a government report showing house prices in London rose nearly 10% in the year to July, it has risen to a boil.