Morning papers: Austerity ‘could last 10 more years’

Britain faces another 10 years of austerity as the government struggles to repair the country’s battered finances, a hard-hitting report warns today, reports the Daily Mail.

The vast deficit racked up by Labour will not be eliminated until after 2020 and possibly not until 2023, according to the Centre for Economics and Business Research.

UK inflation expected to stick at 2.7%

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Steep rises in energy bills are expected to keep inflation painfully high in the official figures out at 9.30 today, reports the Guardian.

Most economists expect the consumer prices index to have stuck at 2.7 per cent for the third month in a row in December, after a series of energy companies pushed up prices at the end of the year.

UK recovery on track, according to OECD data

Britain’s recovery is on track, with the economy in better shape than any of the world’s other leading nations bar the US, according to the Organisation for Economic Co-operation & Development, reports the Daily Telegraph.

Eurozone showing signs of recovery, says IMF chief

The head of the IMF, Christine Lagarde, has fuelled hopes that the European financial crisis is easing by predicting the region will grow this year, reports the Guardian.

Top UK banks back new watchdog

Britain’s biggest banks have thrown their weight behind the creation of a tough new professional standards body for the UK’s beleaguered financial sector as they brace for reaction to bonus awards in the coming months, reports the Financial Times.

Yesterday the British Bankers’ Association called for the creation of an independent Banking Standards Review Council to police the sector.

Junk-bond prices point to return of bulls

The junk-bond market is sending a bullish signal for the global economy in 2013, with investors in US high-yield securities earning higher returns so far this year than those who have bought investment-grade debt, reports the Financial Times.

Obama warns Republicans on debt limit

US president Barack Obama urged Republicans in the US Congress to increase the country’s debt limit without preconditions, saying markets could go “haywire” if there was another confrontation over borrowing, reports the Financial Times.

4,500 jobs at risk at HMV as it calls in administrators after rescue talks fail

HMV is expected to call in administrators from Deloitte today as the 250-strong chain becomes the latest casualty in the battle between online and traditional shops, bringing uncertainty for a workforce of more than 4,500 at 240 HMV stores and nine Fopp outlets, reports the Guardian.

Bank of England gets sweeping powers to prevent next house price bubble

The Bank of England is to be given sweeping new powers to prevent house prices spiralling out of control, amid predictions that a year of stable house prices in 2013 will spark a resurgence in homebuying, reports the Guardian.

The Financial Policy Committee is getting specific powers which that it could use to force banks to hold more capital against mortgages if policymakers fear there is a risk to financial stability.