Finance minister George Osborne says the Conservative-Liberal Democrat coalition will make 'unavoidable' cuts of £83 billion by 2014-15 under the comprehensive spending review.
Britain unveils harshest spending cuts in decades
The British government presented its plans for brutal spending cuts today, slashing nearly half a million public sector jobs and taking the axe to welfare as it battles a record deficit.
Finance minister George Osborne said the Conservative-Liberal Democrat coalition would make "unavoidable" cuts of £83 billion (Dh480bn) by 2014-15 under the comprehensive spending review.
"Today is the day that Britain steps back from the brink. It is a hard road but it leads to a better future," Mr Osborne told parliament as he delivered the review.
Prime minister David Cameron's coalition came to power in May saying it had to take drastic action to to eliminate Britain's £154.7bn deficit - a legacy of the previous Labour government and the recession.
"The action we have taken since May has taken Britain out of the financial danger zone," Mr Osborne said.
He confirmed the government would cut 490,000 public sector jobs over four years. News of the job losses leaked when a minister was photographed last night reading confidential briefing papers in his car.
Mr Osborne said the job losses were "unavoidable when the country has run out of money".
Government departments saw their budgets cut, with the Foreign Office achieving savings of 24 per cent by reducing London-based diplomats, Osborne said.
Police spending would fall by four per cent each year while the budgets of the Home Office and Ministry of Justice would each fall by six per cent a year, he added.
Mr Osborne also announced measures to tackle the huge welfare budget, which accounts for a third of state spending, saying that the state pension age would rise to 66 by 2020, saving more than £5bn a year.
The minister, known as the Chancellor of the Exchequer, said the government was ushering in the "greatest reform to the welfare state for a generation".
Britain's Queen Elizabeth II will also feel the pinch, with royal household spending falling by 14 per cent in 2012/2013 and the queen agreeing to a one-year suspension of government payments under the so-called 'civil list'.
The government had already promised that healthcare and international development aid would be protected from the cuts.
The Labour opposition, unions and some economists say the cuts are too steep and risk plunging the fragile economy back into recession, from which it emerged at the end of last year.
The government is "taking the biggest gamble in a generation with growth, with people's jobs and people's livelihoods," the leader of the opposition Labour party, Ed Miliband, told parliament shortly before the announcement.
The coalition started the cuts process yesterday, announcing that it would shrink the country's armed forces, scrap key assets like a flagship aircraft carrier and reduce the defence budget by eight per cent.
Mr Cameron said 17,000 service personnel would go from the British Army, Royal Air Force and Royal Navy by 2015 - but vowed there would be "no cut whatsoever" to the level of support for forces in Afghanistan.
The International Monetary Fund has endorsed Osborne's spending cuts plans, and European governments facing major protests at their own austerity plans are watching closely to see if Britain's work.
Mr Osborne's announcement today came as official data showed British public sector overspending widened in September to £16.2bn, a record monthly high.