The business week in pictures

China leapfrogged Japan to become the world's second-largest economy, a title Japan has held for more than 40 years. Japan's economy grew 3.9% last year – its first annual growth in three years – and achieved nominal GDP of $5.4742tn (£3.4tn) in 2010, but failed to match China's total of $5.8786tn. Photograph: Peter Parks/AFP/Getty Images

US bookseller Borders, which has struggled with a long-term shift towards digital sales in the publishing industry, declared itself bankrupt after failing to reach a deal with bankers over liabilities of more than $1bn (£625m). The chain, which has 674 US stores employing 19,500 people, closed its UK arm 14 months ago with the loss of 1,100 jobs, and its Australian arm also filed for bankruptcy Photograph: Scott Olson/Getty Images

Unemployment in the UK unexpectedly rose last month, official data revealed, underlining the challenge facing the government in restoring the feelgood factor to voters battered by rising inflation and public service cutbacks. The claimant count – the most timely measure of unemployment – increased by 2,400 to hit 1.46 million in January Photograph: Luke MacGregor/Reuters

The prospect of an interest rate rise this spring increased after inflation rose to 4% last month, the highest annual rate in more than two years and twice the Bank of England's target. The Bank of England came under growing pressure from some quarters to raise borrowing costs from the current 0.5% sooner rather than later, despite the economy's sluggish recovery Photograph: Chris Helgren/Reuters

But Bank of England governor Mervyn King immediately dampened expectations of an early interest rate rise at the publication of the Bank's quarterly inflation report. He said that inflation was likely to fall back to its 2% target next year, given the deterioration in the state of the economy and rising unemployment, and emphasised the temporary nature of the recent price rises that have driven the figure up Photograph: Oli Scarff/Getty Images

That remark in turn provoked a war of words between King and another member of the Bank of England's monetary policy committee, Andrew Sentance, who accused King and his fellow MPC members of "selling Britain by the pound". Sentance, who has been voting for an interest rate rise since June, accused the Bank of being too optimistic about how quickly inflation will fall back to target, and warned that the longer the committee delays, the more drastically it will have to act to prevent inflation running out of control Photograph: David Levene for the Guardian

Multinational mining company BHP Billiton looked to be on target to produce the biggest annual profit ever recorded by a British-listed company of about £20bn – more than the £14bn reported by Shell in 2007 – after reporting first-half profits up a staggering 74% to more than £9bn, thanks to rising global commodity prices and huge demand from China Photograph: Tim Wimborne/Reuters

Convicted investment fraudster Bernie Madoff alleged that leading banks and hedge funds must have known his high-profile investment company was a giant Ponzi scheme, in his first public interview since his arrest in 2008. 'They had to know,' Madoff told the New York Times from prison in North Carolina. 'But the attitude was sort of, "If you're doing something wrong, we don't want to know."' Photograph: Timothy A Clary/AFP/Getty Images

Demand for gold reached a 10-year high last year, the World Gold Council revealed in a report, as Chinese and Indian consumers stepped up jewellery purchases and the world's central banks became net purchasers of the precious metal for the first time in 21 years. Demand for jewellery grew by 17% on the previous year; overall demand was up 9% and above the previous 2008 peak, despite much higher prices Photograph: Parth Sanyal/Reuters