BoE set to downgrade UK growth prospects - today's papers

British businesses are seeing costs rise far more slowly than the headline inflation rate, signalling that price increases are set to return to the Bank of England's target, according to leading economic analysts.

Fathom Consulting said its new analysis supports the policy of keeping interest rates low, ahead of the Bank's updated forecasts which are today expected to downgrade Britain's economic prospects for the fourth quarter running, writes the Telegraph.

Weaker growth, combined with a largely unchanged medium-term inflation picture, will give Governor Mervyn King ammunition to say he is vindicated in his decision to hold interest rates at a record 0.5pc low, despite over-target inflation. MORE...

Europe's largest banks will undertake a new round of stress tests next year that will be tougher than any they have yet faced, according to a senior official with the European Commission. MORE...

China's red-hot economy has cooled slightly, after the government stepped up efforts to fight inflation. Headline inflation eased to 5.3% in April, down from a three-year high of 5.4% in March. MORE...

Greece's ambitious privatisation programme is at risk of coming unstuck, adding yet another hurdle to its faltering deficit-reduction plans. Athens is under pressure from its official creditors to accelerate its sell-off of assets, including gambling businesses, utilities and property portfolios, in an effort to curb its near- €330bn public debt mountain. MORE...

John Paulson, the hedge fund manager who made billions betting against the risky mortgages that bankrupted Lehman Brothers, is set to reap another small fortune from his investments in the defunct bank's debt. MORE...

US regulators are examining Goldman Sachs's role as a clearing broker for an unnamed brokerage in the latest investigation into the Wall Street bank. MORE...