Lloyds Banking Group, bailed out to the tune of £20bn by the taxpayer four years ago, yesterday made two moves signalling its strengthening balance sheet.

Lloyds Banking Group, bailed out to the tune of £20 billion by the taxpayer four years ago, today made two moves signalling its strengthening balance sheet.

The Bank of England today decided against giving a further boost to the British economy in Governor Sir Mervyn King’s penultimate meeting at the helm.

The FTSE 100 index has hit its highest level since December 2007, buoyed by a cut in Australian interest rates, some better-than-expected German factory output data and the afterglow from last week's decent US jobs report.

It is, for our politicians at least, a long weekend for reflection. There is the specific matter of the gains by the UK Independence Party in the elections last Thursday, a sharp enough advance to affect the policies of all parties towards Europe in the months ahead.

The European Central Bank's president, Mario Draghi, slashed interest rates to a historic low yesterday as the central bank hinted at new initiatives to boost loans to small businesses and pledged to extend cheap funds to banks.

Pressure on the European Central Bank to cut interest rates this week has intensified after official statistics yesterday showed that unemployment in the recession-stricken eurozone has reached a record 12.1 per cent, while the rate of inflation has declined to just 1.2 per cent.

Economic View

The Spanish government yesterday said that its recession-struck economy will contract by almost three times more in 2013 than it previously forecast, forcing Madrid to extend its deficit reduction programme by a further two years.

The cost of bailing out Cyprus has swollen to €23bn (£19bn), with the crisis-hit country having to take on the lion’s share of the measures needed to avoid bankruptcy, according to a draft report by its international creditors.

Unemployment across the eurozone soared to yet another new record as analysts warned that the jobs pain would continue for months to come.

Q. Is an exit from the euro really a possibility?

Banks could lose emergency funding within 72 hours, prompting exit from euro

Who will blink first in this €16bn poker game? The European Central Bank’s threat to withdraw emergency funding from crippled Cypriot banks looks like an attempt to play hardball: scare tactics to force the politicians who threw out a hugely unpopular raid on savings into finding €5.8bn from somewhere by Tuesday.