BA Owner IAG Announces Profits Of £182m

International Airlines Group, the owner of British Airways and Iberia, has announced a half year operating profit of £182m (€230m).

The company says the results are £208m (€230m) better than 2013, when it made a £26m loss.

IAG's chief executive, Willie Walsh, told Sky News the turnaround in Iberia had been "stunning" and said it was buying eight Airbus A350-900 aircraft for the airline, as well as eight A330-200 planes.

Mr Walsh said: "Iberia has taken significant steps to restructure its business and the progress made so far means that we can bring new long haul aircraft into the airline's fleet.

"These orders demonstrate our commitment to make Iberia competitive."

More than 3,000 jobs have been cut at the Spanish airline and nearly 1,600 more losses have been announced.

IAG's second quarter operating profit was £301m (€380m), up some £107m (€135m) on last year, as the lucrative spring and summer seasons deliver a big increase in passenger numbers.

Thousands of jobs have been cut at Spanish carrier Iberia

Mr Walsh also told Sky that BA and Iberia were both taking action over the current outbreak of the ebola virus in some African countries.

"Anyone flying into the areas is provided with a briefing from our health services," he said.

"That's a comprehensive briefing which outlines all the issues that people should be aware of.

"I'm satisfied that the measures at the airports where outbreaks have been identified are working, and are working well."

Mr Walsh also defended baggage handling company Swissport, which has been criticised over problems at Gatwick Airport.

Some passengers have faced long delays collecting their bags, with some told to go home without them.

He said: "I think Swissport is a good company - they provide us with services around the world ... To be fair to them, it's not all their fault because Gatwick was affected by some adverse weather which meant schedules were running well off plan and aircraft were arriving at a time where they did not have resources in place.

"I apologise to any of our customers who've been affected by the services provided to us by Swissport.

"But ... all the handling agencies at Gatwick are working to ensure all that all of our customers, and customers of other airlines can get away on their holidays."

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High Street Revival 'Has Shown Little Impact'

By Frazer Maude, Sky News Correspondent

The self-titled "Queen of Shops" has come under fire after her Government-backed bid to revive the High Street has shown little impact.

Wolverhampton was one of 12 town centres chosen to pilot retail guru Mary Portas' High Street revival. It got a £100,000 share of the £1.2m in funding.

That helped finance the opening of five retail outlets. Three of them have been a success, one has diversified, and the fifth went under.

Nick Pitt, manager of the local shopping centre, chaired the Wolverhampton Portas Project. He sees it as a success for the town centre.

"A hundred thousand pounds is good value. And it rallied businesses around to come together in a very selfless way to help people get into business," he told Sky News.

"It was quite a humbling experience. I see people who'd never had the opportunity before to have their own shop and now they have.

"And those people are still helping us now to help other people get into business. And we're determined to do it again."

The celebrity trouble shooter was brought in by the Government two years ago to breathe new life into our struggling High Streets.

But some of her key recommendations, like a reduction in business rates and free parking, were ignored.

Some £1.2m in funding was set aside two years ago to boost business

Labour MP and chair of the Government's Business Select Committee, Adrian Bailey, is critical of the scheme, saying: "Overall, and I would emphasise it time and time again, you will not change the basic problems of the High Street just by putting in these sort of pilots.

"You've got to change the business rates and those obstacles which are deterring people from moving into the High Street in order to provide an imaginative variety of retail offers that people will want to buy into."

Mary Portas was not available for interview, but her CEO David Wood issued a statement to Sky News on her behalf.

It said: "We think there's some justified criticism of the way Government originally implemented the programme and the lack of infrastructure to support the town teams.

"There's also justified criticism of the way the majority of the recommendations were accepted but nothing was done - for example we spoke in the report about parking, business rates, landlords, town-centre-first planning approvals and the like but little was done."

Penny Maudaunt, the newly appointed High Streets Minister, says the scheme has been successful.

"There has been a huge amount of really good work that's gone on locally," she said.

"The pilots have been experiments. There have been a lot of good ideas, some ideas that may not have worked so well, but there are a number of ideas that have worked very well for particular areas and what we have to do is replicate that in other High Streets."

But many businesses say the areas that need tackling are the very ones that Ms Portas highlighted months ago, and which the Government ignored.

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Centrica Boss Urges UK To Remain In Europe

By Mark Kleinman, City Editor

The UK benefits from being a member of the European Union (EU) and should remain part of a reformed economic bloc, the head of Britain's biggest energy supplier said on Thursday.

Speaking to Sky News, Sam Laidlaw, chief executive of Centrica, said that it would be a "great pity" if an eventual referendum on the EU membership resulted in the UK's departure.

"The UK needs to be part of Europe, but Europe equally needs to become more competitive and that's the discussion currently going on," he said.

Mr Laidlaw, who will step down in December after eight years at the helm of the owner of British Gas, also said that there would be negligible costs associated with a Yes vote in September's Scottish independence referendum.

"Scottish Gas is an important retailer and we have a lot of customers, but most of our production is in English waters.

"Those would have to be segregated and it will have some cost but it won't make a material impact to our business."

The Centrica chief was speaking on the day that the company announced a 40% slide in first-half pre-tax profit to £895m.

At British Gas's residential arm, which has 11m UK customers, operating profit fell by 26% to £265m, which it attributed to the mild British winter and a squeeze on margins.

Ofgem, the energy regulator, issued figures on Thursday forecasting that the six biggest energy suppliers would double their margins over the next 12 months, which prompted an incredulous response from Mr Laidlaw, who said the average dual-fuel customer would see their bill fall by £90 this year.

"Bills are already lower this year, profits are lower and prices are lower," he said, adding that further price reductions were unlikely given the backdrop of events in Ukraine and regulatory uncertainty.

"If you look at next winter, gas prices are up 50% on where they are today," he added.

"There are other components of the bills which are not spoken about, such as transport and distribution costs, and environmental levies which are continuing to go up, which makes further bill reductions unlikely."

Mr Laidlaw, who said that he had not thought about his next move after he leaves Centrica, said the threat of a post-general election energy price freeze raised by Ed Miliband, the Labour leader, was acting as a disincentive to investment.

"It has clearly unnerved investors – you see that in share prices – but it has also unnerved rating agencies," he said

"There is heightened political risk and that does affect us in terms of investment.

"In the long run if there is less investment it has an impact on bills and energy security."

The prospect of prolonged Russian sanctions was unlikely to have a significant effect on Centrica, according to Mr Laidlaw, referring to its gas supply deal with Gazprom, the Russian energy group.

They were, however, likely to drive up gas prices in Europe.

"It is too early to speculate how much," he said.

The Centrica chief also argued that further tightening of the rules on foreign takeovers of UK companies were not desirable, saying that the UK had benefited from being an open economy.

"The commitments to the country in terms of creating jobs or research and development are the measures on which you should consider these things," he said.

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US Shares Tumble Amid Weak Corporate Results

US stocks have tumbled about 2%, in a major sell-off following lacklustre US corporate earnings.

The approaching end of the Federal Reserve's economic stimulus, weak eurozone data and the Argentine debt default were also blamed for the slump.

The Dow Jones Industrial Average tumbled 317.06 points (1.88%) to 16,563.30, erasing all its gains this year.

The S&P 500 sank 39.40 (2.00%) to 1,930.67, a seven-week low.

The Nasdaq, meanwhile, plummeted 93.13 (2.09%) to 4,369.77.

The rout followed anaemic earnings from companies such as Whole Foods Market, Kraft Foods, Nike, ExxonMobil and Chevron.

Shares in tech giants such as Apple, Facebook and Google also took a hit.

The CBOE Volatility index, sometimes referred to as Wall Street's fear gauge, jumped 27.2% to close at 16.95, its highest level since April 11.

European stock exchanges fell earlier on Thursday after eurozone data renewed deflation fears.

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Oil Explorer Afren Suspends Top Executives

By Mark Kleinman, City Editor

One of the London stock market's most prominent oil exploration companies has been rocked by a boardroom probe into unauthorised payments.

Sky News understands that Afren, which has operations in Nigeria and other parts of Africa, will disclose on Thursday that Osman Shahenshah, its chief executive, and Shahid Ullah, chief operating officer, have been suspended.

A statement is expected ahead of the start of trading in shares in the FTSE-250 company, which has a market value of £1.7bn.

The crisis could ignite another debate about corporate governance standards among overseas resources companies listed in London following a string of damaging disputes.

Sources said that an independent review carried out by Wilkie Farr & Gallagher, a law firm, had identified the receipt of payments which Afren's board suspected were for the benefit of the two executives.

They added that the announcement of Afren's half-year results on August 4 would be postponed as a result of the news.

Shares in Afren have been buoyed by persistent takeover speculation, although they have risen relatively modestly during the last year.

Afren could not be reached for comment.

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Co-op Revamp Goes On With Security Arm Sale

By Mark Kleinman, City Editor

The restructuring of the Co-operative Group is poised to continue with the sale of its security arm in a deal that will raise money to help shore up its troubled finances.

Sky News understands that the UK's biggest mutual is in exclusive talks to offload Sunwin Services Group, which provides IT, security and other functions to its retail network across the country, employing roughly 1,500 people.

The party with which the Co-op is in discussions is understood to be Cardtronics, a Nasdaq-listed group which describes itself as the world's largest non-bank operator of cash machines.

A deal, which could be struck within weeks, is likely to be worth tens of millions of pounds, although the precise value was unclear on Wednesday.

In a statement, a Co-op spokesman said: "We can confirm that we are in exclusive talks over the sale of Sunwin Services Group which may or may not lead to the sale of the business.

"As part of our ambitious programme of transforming the Co-operative Group we have concluded that Sunwin is non-core as a non-member-facing business."

Sunwin's security operation is focused on providing support for staff as they transfer cash around the Co-op network, although the business has its roots in the mutual's TV rental and repair business, which was founded in 1954.

It now offers other services, including in areas such as IT and the installation and monitoring of fire and burglar alarm systems.

News of the exclusive talks with Cardtronics comes less than a fortnight after the Co-op sold its pharmacies division to Bestway, the cash-and-carry-operator for £620m.

The Co-op is continuing with a process to sell its farming interests, although it decided to abandon an auction of its insurance operations earlier this year.

Richard Pennycook, the Co-op's interim chief executive, said the pharmacies disposal was an important step for the mutual.

"The proceeds will enable The Co-operative to reduce debt and invest in our business and is part of the focused delivery of our clear strategic plans and priorities," he said.

The need to drastically prune the Co-op's portfolio was triggered by a crisis at its banking arm, which had to be bailed out by hedge funds after the emergence of a £1.5bn capital deficit.

The row triggered the arrival and swift departure of Euan Sutherland as the group's chief executive amid a bitter power struggle with regional co-operatives and other stakeholders.

In May, members voted unanimously to approve a series of governance reforms proposed by Lord Myners, the former City minister.

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'Dirty Diesel' Drivers Face New Tax In Cities

Drivers of diesel vehicles face having to pay more in taxes and levies as cities around the UK strive to cut air pollution.

In London, plans to introduce a £10 charge for the most polluting diesel cars are being considered by Mayor Boris Johnson.

These could come into force by 2020.

The Mayor's plans for the Ultra Low Emission Zone (ULEZ) are still subject to full consultation, but it is expected it will require diesel cars to be Euro 6 standard - no more than five years old.

Older petrol-driven vehicles beyond Euro 4 - more than 14 years old - will also be hit by the ULEZ charge.

The final figure for the ULEZ levy is expected to be a similar amount to the congestion charge.

The hike in motoring costs would be on top of the congestion charge, pushing up the cost to at least £20 to drive into the capital's ultra-low emission zone.

The Department for Environment, Food and Rural Affairs said that unless action is taken, London, Birmingham and Leeds would face dangerous levels of pollution from vehicle exhausts by 2030.

London's congestion charge was credited with reducing traffic volumes

Diesel exhaust emissions are responsible for about a quarter of the 29,000 premature deaths caused by air pollution, according to experts from King's College London.

The number of diesel cars in Britain has grown to 11 million, nearly a four-fold increase since 2000, according to the Society of Motor Manufacturers and Traders.

This was largely due to motorists switching to diesel because of greater fuel economy and lower road taxes.

But diesel engines also produce toxins including nitrogen dioxide and particulates, which irritates the lung lining and can cause respiratory disease.

The Labour Party has reportedly planned a countrywide network of low emission zones that would push older diesel cars out of city centres.

Oxford has already introduced a low emission zone for buses and could expand this for other vehicles.

London Mayor environment adviser Mathew Pencharz told The Times: "We want to see an unwinding of incentives that have driven people to diesel.

"Euro engine standards on emissions have not delivered the savings expected, meaning we now have a legacy of a generation of dirty diesels."

All of these initiatives are being driven by the need to meet tighter European regulations on clean air and avoid the threat of heavy fines for breaching them.

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Watchdog To Confirm Bank Bonus Clawback Plan

The UK banking watchdog will confirm on Wednesday that it is introducing the world's toughest rules for clawing back bankers' pay, even as it offers a fig-leaf to the industry by dropping some of its most punitive proposals for reform.

Sky News has learnt that the Bank of England's Prudential Regulation Authority (PRA) will announce that bonuses paid by the biggest banks operating in the City will be subject to a period of clawback lasting for at least seven years from the point of award.

This will allay fears that clawbacks would begin only when three year or five year bonus deferral periods have ended, which would have meant that bankers faced at least a decade before they could be certain that variable pay was not at risk of being reclaimed by their employers.

The PRA will also disclose that it has also abandoned a proposal contained in a consultation paper published in March for the new rules – which come into effect on January 1 next year – to be applied retrospectively.

Under its original plan, the regulator wanted firms to claw back pay awarded prior to next year but with a six-year limit in accordance with a statute of limitations for employment contracts.

A senior lawyer who spoke to Sky News on condition of anonymity said they had been briefed that the draft rules applying to awards made before 2015 would not be included in the final clawback policy statement to be published by the PRA on Wednesday.

Concerns about the legality of the six-year limit had been overcome, allowing the PRA to propose a longer clawback period, the legal source said.

The new framework for clawing back bankers' pay will be the toughest in the global banking industry.

It is expected to trigger claims from London-based international banks that they will be placed at a significant disadvantage in overseas financial centres, where foreign rivals will not be subject to the same stringent rulebook.

However, the PRA's revised plans suggest that it has heeded some of the industry's warnings about the enforceability of its original proposals.

Senior bank executives are also likely to be privately relieved at the reduction in the overall period in which bonuses are at risk, and at the decision to abandon retrospective application.

Sources said the new rules would apply only to so-called code staff – defined by regulators as bank employees who take material risks – and only to level one and two firms, which are the biggest in the sector.

As Sky News revealed earlier on Tuesday firms will be required to amend the employment contracts of affected staff.

The PRA has, though, decided that the circumstances in which clawback must be applied are narrower than those outlined in its consultation paper in March.

Sources familiar with the matter said the final rules would be limited to misconduct or misbehaviour by individuals, and a material failure of risk management by the firm or business unit where the employee worked.

An earlier proposal to also apply clawback where there has been a material downturn in financial performance is understood to have been dropped.

The Bank of England declined to comment on Tuesday.

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Lloyds 'Risks Criminal Action' In Rigging Case

The Bank of England (BoE) governor has warned Lloyds Banking Group that "clearly unlawful" conduct over fee manipulation may amount to criminal behaviour as it was fined more than £200m.

Some £70m of the penalty related to efforts by Lloyds to rig fees payable to the BoE under a taxpayer-backed government programme aimed at supporting banks during the financial crisis.

In a letter dated July 15, Mark Carney told Lloyds chairman Lord Blackwell that attempts to reduce payments under this special liquidity scheme (SLS) were "reprehensible".

Mr Carney criticised attempts to reduce Lloyds' payments to the SLS scheme

Lloyds was fined a total of £218m by UK and US regulators over manipulation of the critical global interest rate Libor benchmark and the repo rate - used to calculate fees due to the BoE for its support.

It has also paid a £7.76m compensation figure to the BoE over the now-defunct SLS.

The UK regulator, the Financial Conduct Authority (FCA), fined Lloyds £105m, while the US Commodity Futures Trading Commission (CFTC) fined Lloyds £62m and the US Department of Justice penalty was £51m.

Lloyds apologised for the "unacceptable" actions of individuals involved in the conduct and said the bank's previously lax operating culture was to blame.

MPs pursued the issue of Libor-fixing with BoE officials in 2012

It said: "The manipulation of submissions covered by the settlements took place between May 2006 and 2009 and the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings."

The CFTC said the "unlawful conduct of Lloyds" undermined the integrity of Libor, which is the basis of trillions of dollars of financial instruments.

The FCA said the SLS manipulation happened between April 2008 and September 2009.

The regulator said more than a dozen individuals at Lloyds, including seven managers, were directly involved in or were aware of, the Libor manipulation.

Barclays was the first bank implicated in rate-fixing of Libor

Lloyds would have been hit by a 30% larger FCA fine if it did not settle at an early stage.

More than £2bn has now been paid by banks globally to regulators over alleged manipulation, including £290m by Barclays and £390m by RBS.

FCA director of enforcement and financial crime Tracey McDermott said: "Colluding to benefit the firms at the expense, ultimately, of the UK taxpayer was unacceptable."

On Friday, Sky News City Editor Mark Kleinman revealed the 25% taxpayer-owned group would seek to clawback bonuses paid to at least 15 former employees implicated in the inter-bank rate scandal.

The BoE said the latest case demonstrated the need for the Fair and Effective Markets Review, launched last month, which aims to restore public confidence in financial markets.

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Bankers Should Be Made To Take 'Moral Oath'

A think tank believes bankers should be expected to swear an oath in which they promise to behave properly, in the same way as doctors.

ResPublica has drawn up a statement that it says people who work at major financial institutions should agree to adhere to.

The oath includes a promise to "prioritise the needs of customers", to "provide a quality of service" and to "confront impropriety".

The call for a code of ethics comes after a series of scandals such as the mis-selling of payment protection insurance, Libor rate rigging, mis-selling of interest swaps to small businesses and even money laundering.

The British Bankers Association says an oath could be part of an answer

ResPublica's full report, Virtuous Banking: Placing ethos and purpose at the heart of banking, is being launched by the chairman of the Banking Standards Review Council, Sir Richard Lambert.

The think tank says it would be up to banking's trade bodies, the British Bankers' Association (BBA), the Building Societies Association and the new Banking Standards Review Council to get the oath adopted and rolled out.

ResPublica director Phillip Blond said: "As countless scandals demonstrate, virtue is distinctly absent from our banking institutions.

"Britain's bankers lack a sense of ethos and the institutions they work for lack a clearly defined social purpose.

"The bankers' oath represents a remarkable opportunity to fulfil their proper moral and economic purpose, and finally place bankers on the road to absolution."

The Hippocratic Oath of doctors, on which the bankers' oath is based, dates back 2,500 years to Greek medical pioneer Hippocrates.

Doctors are traditionally required to take the hippocratic oath before they can practise. If they are found to have broken the oath, they can face consequences.

Banks in Britain employ just under 440,000 staff, equivalent to around 1.4% of the UK workforce.

BBA executive director for financial policy and operations Paul Chisnall said: "Restoring trust and confidence is the banking industry's number one priority."

He accepted that a wide-ranging banking oath "very well could be part of the answer".

As part of an ongoing probe into Libor interest rate fixing, Lloyds Banking Group has been fined £218m by UK and US authorities.

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Former CBI Chief To Aid Osborne Markets Probe

By Mark Kleinman, City Editor

A trio of heavyweight figures including a former head of the CBI will this week be appointed to scrutinise a Government-led probe into financial markets launched in the wake of a string of major trading scandals.

Sky News can reveal that Sir Richard Lambert, who ran Britain's biggest employers' group until 2011, is to be an independent member of the Fair and Effective Markets Review, which was disclosed by George Osborne, the Chancellor, in June.

Sir Richard will be one of three independent members of a practitioners' panel to be chaired by Elizabeth Corley, chief executive of Allianz Global Investors, one of the world's biggest fund managers.

The other independent members, who will examine the panel's work, will be Gay Huey Evans, a former Barclays executive and one-time chairman of the International Swaps and Derivatives Association; and Jonathan Moulds, who previously ran the European operations of Bank of America Merrill Lynch.

The Bank of England is expected to announce their involvement in the next few days, according to a person close to the situation.

Sir Richard's involvement comes just weeks after he recommended the creation of a new body to improve standards in the UK banking industry in an attempt to restore trust in it.

He and the other independent members will oversee the work of a group of serving City executives whose input is seen by the Treasury as crucial to restoring the international reputation of London's financial markets.

Mark Carney and George Osborne at the Mansion House in June

A number of sub-groups will be formed to examine different areas of financial sector activity, with the international competitiveness of the UK likely to be an important preoccupation for those involved.

Major banking groups have been hit by massive fines during the last two years, dealing a blow to the industry's efforts to rehabilitate its image in the aftermath of the global financial crisis.

Lloyds Banking Group, which is part-owned by UK taxpayers, is expected to announce on Monday that it is to pay more than £200m for its role in the Libor rate-rigging affair.

Banks and other financial institutions have also faced penalties for misconduct in setting benchmark prices for commodities and product mis-selling, while a major inquiry into fraud in foreign exchange markets is expected to result in huge fines later this year.

Among the objectives of the new investigation will be to inform the broader international debate about trading practices.

The Chancellor is determined to be viewed as a hardliner on City miscreants, and has already said that he wants to make the manipulation of financial benchmarks a criminal offence.

In his Mansion House speech in June, Mr Osborne said the Fair and Effective Markets Review would form an important element of moves to improve conduct in banking.

"The integrity of the City matters to the economy of Britain. Markets here set the interest rates for people's mortgages, the exchange rates for our exports and holidays, and the commodity prices for the goods we buy.

"I am going to deal with abuses, tackle the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them."

Mark Carney, the Governor of the Bank of England, said the probe would help the City to "build true markets...that are open and transparent, where access extends beyond a privileged few, and where all who wish to trade have common information and commonly accessible prices".

The review will also be jointly led by the Financial Conduct Authority, whose chief executive, Martin Wheatley, said: "Confidence and trust are critical to financial markets – and robust, reliable benchmarks are the bedrock of market integrity.

"I welcome this review, which will ensure that key markets operate with the highest standards of integrity."

The Treasury and Bank of England declined to comment on the names of those involved in the review.

None of the independent members of the practitioners' panel could be reached for comment.

The review is expected to report back by the end of summer next year.

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Fracking Rules As Push For Drilling Heats Up

Fracking will be only be allowed in national parks and areas of outstanding beauty in "exceptional circumstances", ministers say, as new bidding for shale exploration licences opens.

The policy is part of new guidance published today by Government which is aiming to offer up vast swathes of Britain for fracking.

The Government has committed to going "all out for shale", claiming development of the gas and oil resource is needed to improve energy security, boost jobs and the economy.

But opponents say the high-pressure injection of water risks polluting water supplies, damaging the environment and causing minor earthquakes, and argue further fossil fuels should not be extracted due to climate change.

Business and energy minister Matthew Hancock said: "The new guidance will protect Britain's great National Parks and outstanding landscapes, building on the existing rules that ensure operational best practices are implemented and robustly enforced.

"Ultimately, done right, speeding up shale will mean more jobs and opportunities for people and help ensure long-term economic and energy security for our country."

Where an application in National Parks is refused and the developer launches an appeal, Communities Secretary Eric Pickles will consider whether to make the final decision himself to ensure the policy is being properly applied.

But Greenpeace campaigner Louise Hutchins warned: "Eric Pickles' supposed veto power over drilling in National Parks will do nothing to quell the disquiet of fracking opponents across Britain.

"Ministers waited until the parliamentary recess to make their move, no doubt aware of the political headache this will cause to MPs whose constituencies will be affected."

Friends of the Earth's energy campaigner Tony Bosworth said: "Today the risk of fracking has spread. This threat to the environment and public health could now affect millions more people.

"Those who thought that fracking would only happen in other places will now worry about it happening on their doorstep.

The shale exploration licences which can be applied for from today provide the first step to start drilling but do not give an absolute agreement to drill.

Planning permission, permits from the Environment Agency and agreement from the Health and Safety Executive will be required for further drilling.

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UK Economy Emerges From Six-Year Downturn

Official figures show the UK economy has emerged from six years of lost growth to return to its pre-crisis peak.

The Office for National Statistics (ONS) said Britain's economy was now bigger than it was before the financial crisis as gross domestic product (GDP) expanded by 0.8% in the second quarter of the year.

The performance matched that of the previous quarter, although today's figure is only a first estimate and subject to revision.

It meant that on an annual basis, growth was 3.1% higher than was measured in the same period last year, leaving total output 0.2% higher than in the first quarter of 2008 - its previous peak.

Consumer spending is still driving growth

The measure of GDP per head - taking account of a growing population and weaker productivity - remains below the peak.

In its April to June calculations, the ONS charted 1% quarter-on-quarter growth in the service sector - which accounts for 75% of total UK GDP - while industrial production rose 0.4%.

However both construction and agriculture made negative contributions of 0.5% and 0.2% respectively. Both were hit by the effects of a very wet winter and spring.

The construction sector was damaged by a weak May

The ONS said only the service industry was now bigger than it was before the crisis, with industrial output and construction still 10% smaller.

Chancellor George Osborne said: "Thanks to the hard work of the British people, today we reach a major milestone in our long-term economic plan."

He tweeted: "We owe it to hardworking taxpayers not to repeat the mistakes of the past.

"Economy bigger than previous peak in 2008 but long way to go - the Great Recession was one of deepest of any major economy & cost UK 6 years."

However many people reacted to the news with scepticism. Posts of Sky News' Facebook page suggested not everyone feels Britain is out of the economic doldrums.

Ed Balls accuses ministers of creating a cost of living crisis

:: Robert Futsal Brassett: "They may declare it. But it don't feel like it."

:: Dorothy Dougan "Just in time for the General Election how fortuitous. So do we all get pay rise now?"

:: Jax Bell - "So NOW can we all get a decent pay rise,MPs 11% everyone who is on benefits/pension 2.5% Working people in North East 1%. Worst Government Leaders in British History"

:: Josephine Hargreaves - "Really? Come out into the real world & talk to the ordinary people to see if its over!"

:: Kerry Livesey - "Good news but let's hope the low paid workers benefit"

The pace of the recovery will feed into expectations about the timing of an interest rate rise by the Bank of England though its governor Mark Carney recently suggested it would be tied to improved data on wage growth.

While employment has soared in recent months, salary growth has fallen to 0.3% year-on-year and continues to lag inflation - last measured at 1.9%.

The scenario that has left the Bank fearing the impact of any rate rise on consumers, whose spending remains the biggest driver of economic growth.

Labour's shadow chancellor, Ed Balls, said of the latest GDP figures: "At long last our economy is back to the size it was before the global banking crisis - three years after the US reached the same point.

"But with GDP per head not set to recover for three more years and most people still seeing their living standards squeezed, this is no time for complacent claims that the economy is fixed.

"Wages after inflation are down over £1,600 a year since 2010, housebuilding under this government is at its lowest level since the 1920s and business investment is lagging behind our competitors.

"Labour's economic plan will make Britain better off and fairer for the future."

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Housing Shortage Sees More Tenants Evicted

By Mark White, Home Affairs Correspondent

Increasing numbers of private tenants are being evicted or exploited by landlords cashing in on the increase in house prices and the shortage of rented accommodation, according to latest figures.

Citizens Advice (CAB) saw a 38% rise in the number of people turning to the charity for help with eviction notices served on them, despite being up to date with their rent.

CAB recorded 5,000 cases across the country in 2013/2014 where tenants complained about being forced from their homes, even though they were not in arrears. That figure is up from 3,750 the previous year.

Problems in London and the South East are particularly acute, the charity said, where many house prices are the highest in the country.

Private tenant Ryan Herran told Sky News he was being forced from his Muswell Hill home of five years, because he complained about damp and mould in the property and demanded his landlord fix the problem.

After months of wrangling with the owner, he was eventually served with a section 21 eviction order.

"I was actually in shock for a couple of days because I've always been a good tenant and always paid my rent and never engaged in anti-social behaviour," he said.

"I did ring up the property management company and they told me they don't have to give a reason under the section 21 eviction notice. They said they felt they were doing me a favour by at least giving me two months notice."

Mr Herran believes his eviction is motivated by spite and certainty on the part of the landlord that he would easily be able to find another tenant.

The number of tenants seeking help over eviction has nearly doubled

Roger Harding from the homelessness charity Shelter said: "Sadly landlords can evict for no reason, even if you've been keeping up with the rent. 

"We've found many worrying examples where landlords have evicted people simply because they don't want to have to deal with repair issues and that's something we want to see outlawed."

During January to March 2014 house prices rose by 18% in London and 10% in the South East, compared to the same period the previous year.

CAB's figures reveal those rises were mirrored by an increase in private tenants reporting they had been served with eviction notices, despite being up to date with their rent.

The charity said the number of tenants in London and the South East seeking help over eviction notices between January and March 2014 was 900, compared with 400 over the first quarter of the year before.

Landlord Richard Blanco rents out properties across six London boroughs and is also a member of National Landlords Association. He said private landlords are often unfairly maligned.

"There's a small minority of rogue landlords who might try and increase rents but really the most sensible business model for landlords is to maintain the property well and to have a good relationship with tenants and to try to ensure tenants stay as long as possible," he said.

Mr Blanco said, contrary to widespread belief, more than three quarters of private tenants have not faced an increase in rents over the past 12 months.

The Government is in the process of introducing new legislation which it hopes will strengthen the rights of private tenants and help protect them from exploitation, or unjustified eviction.

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