Britain's opposition Conservative Party gained a mid-term parliamentary seat from the ruling Labour Party on Friday, a new setback to Prime Minister Gordon Brown's fading political fortunes.

British house prices will drop 7 percent this year and there is likely to be a 35 percent slump in property market transactions, according to revised forecasts from a leading mortgage body.

Low-cost carrier Ryanair is likely to benefit in the event of a major slowdown hitting Europe, according to the airline’s chief executive Michael O’Leary.

Britain's banks are set to swap between 80 billion and 90 billion pounds ($175 billion) of mortgage-backed assets for Treasury bills, nearly twice the base level set by the Bank of England last month, the Financial Times reported on Friday.

British bank Barclays said profits fell by an undisclosed amount in the first quarter and refused to rule out a rights issue after a 1 billion pound ($1.95 billion) writedown on assets tarnished by the credit crunch.

Compass Group, the world's biggest caterer, beat forecasts with a 29 percent rise in first-half profit on Wednesday and unveiled plans to buy back 400 million pounds ($779 million) of its shares over 18 months.

If we thought the Bank of England was walking a tightrope before, then the Bank's May inflation report says the rope is even tighter. Since the February report growth expectations have deteriorated and inflation expectations have strengthened.

British inflation will shoot up over the next year and remain above the 2 percent target in 2 years if rates fall by half a percentage point as markets expect, the Bank of England's new forecasts showed on Wednesday.

Prime Minister Gordon Brown, seeking to reverse a slump in popularity, offered help on Wednesday for Britain's troubled housing market.

Soaring food and fuel bills pushed up Britain's inflation rate by its biggest amount in nearly six years, further denting expectations of interest rate cuts despite a slowing economy.

Carphone Warehouse is to sell a 50 percent stake in its retail unit for 1.1 billion pounds ($2.2 billion) to consumer electronics retailer Best Buy and the two groups will launch a new company.

UK interest rates are expected to remain on hold at 5 percent when the Bank of England’s Monetary Policy Committee announces its decision Thursday, as fear of inflation prevents aggressive cuts that could boost Britain’s weakening economy, analysts told CNBC.com.

British Prime Minister Gordon Brown was heading for a "mauling" in his first electoral test with his ruling Labour Party recording its worst performance in local polls in three decades, early results showed on Friday.

The scale of losses and the economic fallout from the credit crunch may not be as bad as feared and sub-prime write-offs could end up costing less than half market forecasts, the Bank of England said on Thursday.

The board of Britain's HBOS meets on Monday amid growing speculation the mortgage bank is set to announce plans for a rights issue of shares of up to 4 billion pounds ($7.9 billion) to shore up its capital base.