Economics / Markets

Brussels is to curb bankers' bonuses from next year in a major blow to the City and the government.

The global economic recovery will slow this year unless the US averts $85bn (£56bn) in spending cuts that start today, the International Monetary Fund has said.

Lloyds Banking Group has narrowed its losses for 2012 to £570m, from £3.5bn the previous year.

Royal Bank of Scotland (RBS) has posted a pre-tax loss of £2.2bn in the fourth quarter, taking full year 2012 losses to £5.2bn, but despite the results the bank said the government is much closer to selling its stake.

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UK GDP contracted 0.3% in the last quarter of 2012, according the second reading of the data.

The Bank of England's deputy governor, Paul Tucker, has raised the prospect of introducing negative interest rates to boost lending and support the UK economy.

European bond and stock markets saw a sharp sell-off on Monday after a shock result from the Italian election, where no political group managed to win a majority vote.

Taxpayers could face a £100 bn bill for the loss of Britain's much-prized AAA credit rating. The staggering sum, equivalent to 5p on the basic rate of income tax, comes from the Treasury's own forecast for a worst-case scenario.

Moody's has stripped the UK of its AAA credit rating on fears over rising government debt and years of slow economic growth ahead.