Britain’s new coalition government cut its own pay by five per cent today in a statement of intent about tackling a record budget deficit.
The Conservatives and the Liberal Democrats this week agreed on forming a new government after an inconclusive election.
Reducing Britain's record budget deficit of over 11 per cent of national output will be the first test of the relationship.
A five per cent pay cut for all ministers was agreed at the first meeting of the new cabinet today. Most senior ministers are paid more than £140,000 (€165,000).
Markets are looking for signs the Conservative-led coalition will quickly implement a plan to tackle the £163 billion (€192 billion) deficit by trimming public spending, initially by £6 billion (€7 billion) this financial year.
"We are all very aware of the seriousness of the situation and frankly if we don't have a credible programme to reduce the deficit...then we won't have the confidence of the markets and the confidence of the country," Culture Secretary Jeremy Hunt told reporters after the hour-long meeting.
The government has promised an emergency budget within 50 days. Mr Cameron said yesterday the government had the worst economic inheritance of modern times in Britain.
Economists quoted by British media said they also expected a rise in the VAT sales tax from the current 17.5 per cent.
Other legislation expected on the agenda soon is a plan for a banking levy, a commission to investigate separating retail and investment banking and plans to give the Bank of England more clout as a financial watchdog.
The atmospherics of the new partnership between Conservative leader Cameron and his deputy Liberal Democrat leader Nick Clegg dominated newspapers, with most focussing on their new friendship after weeks of sniping at each other on the campaign trail.
The coalition government ends 13 years of Labour party rule under Tony Blair and then Gordon Brown.
Key figures in the new government include Chancellor George Osborne, Vince Cable, the new business secretary, William Hague, in charge of foreign affairs, Liam Fox with the defence brief and Theresa May, the new home secretary.
Mr Osborne has become the youngest finance minister in over a century and some in the finance industry have expressed scepticism about his credentials.
Ministers emerged in buoyant mood today after attending the government's first cabinet meeting at Downing Street.
After yesterday’s good-humoured double act between Mr Cameron and his deputy, Liberal Democrats leader Nick Clegg, the mood of optimism appeared to have infected their colleagues at the top table.
“It was excellent really, it is like we have been working together for years,” beamed Iain Duncan Smith, the new Work and Pensions Secretary as he left 10 Downing Street.
Education Secretary Michael Gove was in equally upbeat mood. “It was great, actually,” he told waiting reporters as he walked down Whitehall to his new department. “I think we had a really constructive meeting. I was delighted by the sense of partnership and common purpose that we had there.”
He was asked if the Conservatives had finally buried the hatchet with their former enemies. “There were no hatchets to bury,” he replied. “We had a great agreement and the cabinet worked very well together.”
Reuters/PA