LONDON (Reuters) – Tensions over how to make banks safer are set to flare within the Conservative-led coalition government this year, with the smaller Lib Dem partners eager to push for a tougher approach in an effort to rebuild their popularity.

Any serious rift may force the centre-right Conservatives to agree to stricter reform or face the outside possibility of an embarrassing defeat in parliament when any proposed legislation goes to the vote.

The publication of the Independent Commission on Banking’s final report next Monday will kick off the political wrangling, with the government expected to come up with proposals for legislation by the end of the year.

Both parties will want to avoid the tag of being too soft, with public resentment still lingering over the role of the banks in the 2008-9 financial crisis, although the technical nature of any reforms will make it easier to fudge a response.

And the Conservatives, who favour light-touch regulation and have close links to the financial sector, may be prepared to take a short-term hit in popularity if it keeps the City of London — and the party faithful — on side.

“They are neo-liberals,” said Steven Fielding, a political history professor at the University of Nottingham.

“They probably genuinely feel that, apart from a little bit of tweaking, there really isn’t anything much that needs to be done. Maybe they will take a short-term hit because they won’t be seen to be banker bashing but in the longer term, so long as it all works out and the economy grows, most people won’t remember.”

LONDON (Reuters) – The economy looks unlikely to pick up speed from the meagre growth rate of the second quarter as worried consumers cut back on spending and the global outlook turns gloomier.

With the government’s hands tied by tough austerity measures aimed at erasing a huge budget deficit, the onus to boost growth lies with the Bank of England, though a fresh round of monetary stimulus still looks unlikely for the time being.

The economy grew by just 0.2 percent in the second quarter, taking annual growth to 0.7 percent, the Office for National Statistics said on Friday, confirming preliminary estimates.

“The main concern is whether the soft patch will turn into something more protracted,” said Markit economist Chris Williamson.

“The business and consumer surveys indicate that growth most likely remained lacklustre in July and August,” he said, adding that he again expected an expansion of only 0.2 percent between July and September.

A number of special factors hit growth between April and June, including an extra holiday for the royal wedding and supply chain disruptions in the aftermath of March’s earthquake and tsunami in Japan.

The ONS said those factors shaved up to 0.5 percentage points off quarter-on-quarter growth and analysts expect some of this to be recovered in the third quarter.

DONCASTER (Reuters) – The Bank of England can hold fire on further monetary stimulus despite economic weakness and recent market turmoil as the overall situation still looks better than in the run-up to the financial crisis, BoE policymaker Martin Weale said on Thursday.

The Bank was, however, still in a position to support the economy with further asset purchases should inflation look set to fall too far below the target as yields at the longer end of the market were not at historically low levels, he said.

“I should make clear that I do not think our August forecast or the more recent market movements since then as yet make a case for such a policy,” Weale said in a speech in Doncaster.

“Although the economy is weaker than we would like, business surveys do not suggest the picture is, at present, like that of the summer of 2008.”

The BoE had unanimously voted to hold rates at a record low of 0.5 percent in early August when Weale and chief economist Spencer Dale unexpectedly dropped their calls for higher interest rates.

Weale’s comments chime with remarks of fellow policymaker David Miles, who said in an interview last week that he would vote for more quantitative easing if inflation looked like it would fall substantially beneath the target and stay there.

Speculation about a second round of quantitative easing has since increased as equity markets slumped over 10 percent, pushed down by fears of a renewed recession and the ongoing euro zone debt crisis.

DONCASTER, England (Reuters) – The Bank of England can hold fire on further monetary stimulus despite economic weakness and recent market turmoil as the overall situation still looks better than in the run-up to the financial crisis, Bank policymaker Martin Weale said on Thursday.

The Bank was, however, still in a position to support the economy with further asset purchases should inflation look set to fall too far below the target as yields at the longer end of the market were not at historically low levels, he said.

“I should make clear that I do not think our August forecast or the more recent market movements since then as yet make a case for such a policy,” Weale said in a speech in Doncaster.

“Although the economy is weaker than we would like, business surveys do not suggest the picture is, at present, like that of the summer of 2008.”

The Bank had unanimously voted to hold rates at a record low of 0.5 percent in early August when Weale and chief economist Spencer Dale unexpectedly dropped their calls for higher interest rates.

Weale’s comments chime with remarks of fellow policymaker David Miles, who said in an interview last week that he would vote for more quantitative easing if inflation looked like it would fall substantially beneath the target and stay there.

Speculation about a second round of quantitative easing has since increased as equity markets slumped over 10 percent, pushed down by fears of a renewed recession and the ongoing euro zone debt crisis.

DONCASTER (Reuters) – The Bank of England can hold fire on further monetary stimulus despite economic weakness and recent market turmoil as the overall situation still looks better than in the run-up to the financial crisis, BoE policymaker Martin Weale said on Thursday.

The Bank was, however, still in a position to support the economy with further asset purchases should inflation look set to fall too far below the target as yields at the longer end of the market were not at historically low levels, he said.

“I should make clear that I do not think our August forecast or the more recent market movements since then as yet make a case for such a policy,” Weale said in a speech in Doncaster.

“Although the economy is weaker than we would like, business surveys do not suggest the picture is, at present, like that of the summer of 2008.”

The BoE had unanimously voted to hold rates at a record low of 0.5 percent in early August when Weale and chief economist Spencer Dale unexpectedly dropped their calls for higher interest rates.

Weale’s comments chime with remarks of fellow policymaker David Miles, who said in an interview last week that he would vote for more quantitative easing if inflation looked like it would fall substantially beneath the target and stay there.

Speculation about a second round of quantitative easing has since increased as equity markets slumped over 10 percent, pushed down by fears of a renewed recession and the ongoing euro zone debt crisis.

LONDON, Aug 17 (Reuters) – The Bank of England inched closer on Wednesday to launching a second round of quantitative easing, after two policymakers unexpectedly dropped their calls for higher interest rates against a backdrop of rising unemployment.

BoE chief economist Spencer Dale and former academic Martin Weale — who had called for tighter policy for the past six months — voted with the majority to keep rates at a record low this month, largely due to a darkening economic outlook.

“The slowing in world demand growth and the heightened tensions in financial markets meant that the balance of risks to the medium-term inflation outlook had clearly shifted to the downside,” minutes to the BoE’s Aug. 3-4 Monetary Policy Committee meeting said.

Only long-standing dove Adam Posen has called for more quantitative easing this month, but other policymakers considered it and said further asset purchases might be needed if risks to Britain’s economy materialised, the minutes showed.

British government bond prices rallied and sterling fell after the publication of Wednesday’s minutes, which coincided with official data showing British unemployment rose at its fastest pace in more than two years in July.

“The hawks have thrown in the towel at last,” said Nida Ali, an economic advisor to accountants Ernst & Young. “More Quantitative Easing has gone from being a mere back-up option to being a genuine possibility in the near future.”

Britain’s government has embarked on a five-year austerity plan to erase a massive budget deficit, leaving no room for extra spending to boost the economy, and placing the onus on the Bank to act if the economy runs into trouble.

LONDON (Reuters) – Britain will seek to rebuild business confidence in riot-hit London by creating an enterprise fund on Wednesday for the worst-affected areas, according to a government source, as ministers come under pressure to do more than just talk tough.

Much of the government’s response to four days of rioting and looting across England last week has been limited to harsh rhetoric against the looters, with a handful of measures to toughen up policing.

Critics say deeper social and economic problems such as inequality, deprivation and high youth unemployment must also be addressed if Prime Minister David Cameron is to achieve his goal of fixing what he calls “broken Britain.”

Some have drawn parallels with inner-city riots in London and the northern city of Liverpool in the early 1980s which, although initially blamed on lawlessness, were found by an inquiry to have been triggered by racial inequality, poverty and tensions over heavy-handed policing.

“We can get immediate help to those areas that bore the brunt of the disturbances and get growth moving,” the source said.

The new fund is intended to help get businesses in areas of London such as Tottenham — where the riots began — and Croydon back on their feet, the source said.

Details will be announced by ministers on Wednesday, alongside the creation of more enterprise zones across Britain intended to spur private sector growth in a depressed economy struggling to grow again after an 18-month recession.

LONDON, Aug 17 (Reuters) – Britain will seek to rebuild business confidence in riot-hit London by creating an enterprise fund on Wednesday for the worst-affected areas, according to a government source, as ministers come under pressure to do more than just talk tough.

Much of the Conservative-Liberal Democrat coalition government’s response to four days of rioting and looting across England last week has been limited to harsh rhetoric against the looters, with a handful of measures to toughen up policing.

Critics say deeper social and economic problems such as inequality, deprivation and high youth unemployment must also be addressed if Prime Minister David Cameron is to achieve his goal of fixing what he calls “broken Britain”.

Some have drawn parallels with inner-city riots in London and the northern city of Liverpool in the early 1980s which, although initially blamed on lawlessness, were found by an inquiry to have been triggered by racial inequality, poverty and tensions over heavy-handed policing.

“We can get immediate help to those areas that bore the brunt of the disturbances and get growth moving,” the source said.

The new fund is intended to help get businesses in areas of London such as Tottenham — where the riots began — and Croydon back on their feet, the source said.

Details will be announced by ministers on Wednesday, alongside the creation of more enterprise zones across Britain intended to spur private sector growth in a depressed economy struggling to grow again after an 18-month recession.

LONDON, Aug 11 (Reuters) – Prime Minister David Cameron vowed on Thursday to hunt down the street gangsters and opportunistic looters he blamed for Britain’s worst violence in decades, and acknowledged that police tactics had failed at the start of the rioting.

“The fightback has well and truly begun,” the Conservative leader, grappling with a defining crisis of his 15-month-old premiership, told an emergency session of parliament.

“As to the lawless minority, the criminals who’ve taken what they can get, I say this: We will track you down, we will find you, we will charge you, we will punish you. You will pay for what you have done,” Cameron said.

Police have arrested more than 1,200 people across England, filling cells and forcing courts to work through the night to process hundreds of cases. Among those charged were a teaching assistant, a charity worker and an 11-year-old boy.

British leaders are concerned that the rioting could damage confidence in the economy and in London, one of the world’s biggest financial centres and venue for next year’s Olympics.

Cameron is under pressure from different quarters to ease austerity plans, toughen policing and do more for inner-city communities, even as economic malaise grips a nation whose social and perhaps racial tensions exploded in four nights of mayhem, first in the capital and then other major cities.

The initial police response was inadequate, Cameron told legislators who had been recalled from their summer break. “There were simply far too few police deployed on to the streets. And the tactics they were using weren’t working.”

LONDON, Aug 11 (Reuters) – Prime Minister David Cameron, grappling with what could prove a defining crisis of his premiership, told parliament on Thursday rioters behind Britain’s worst violence in decades would be tracked down and punished.

“The fightback has well and truly begun,” he said in a statement to an emergency session of parliament, telling rioters: “You will pay for what you have done.”

Cameron is under pressure to soften austerity plans, toughen policing and do more for inner-city communities, even as economic malaise grips a nation whose social and perhaps racial tensions have exploded in four nights of bewildering mayhem.

The British leader said he would keep a higher police presence of 16,000 officers on London streets through the weekend and would consider calling in troops for secondary roles in future unrest to free up frontline police.

Among other measures, he said he would give police powers to demand the removal of face masks or other coverings if their wearers were suspected of crime, and pledged to crack down on criminal “street gangs” to “help mend our broken society”.

He also promised compensation for people whose homes or businesses were damaged by rioters, even if they were uninsured.

Cameron had ordered a rare recall of parliament from its summer recess to debate the unrest which flared first in north London after police shot dead an Afro-Caribbean man.