23 Jun 2010

Britain unveils tough budget measures

6:29 am on 23 June 2010

Britain's new coalition government has unveiled spending cuts and tax increases to try to bring down the budget deficit.

Among the measures announced by Chancellor George Osborne are an increase in VAT to 20%, a freeze in child benefit and public sector pay, and a 25% cut in public service spending.

Mr Osborne told parliament spending cuts and tax rises are vital to tackle the deficit, which is one of the largest in the developed world.

He said decisive action was needed to prevent a "catastrophic collapse" in economic confidence but stressed it would be done in a "fair" way with the better-off shouldering most of the burden.

Trade unions have warned hundreds of thousand of jobs could be lost in the public services, potentially wrecking local economies and sparking a "double-dip" recession, the BBC reports.