Britain's new coalition government has announced the country's toughest cuts to public spending in a generation in a bid to reign in record debts of $230bn.
George Osborne, the UK finance minister, said the emergency budget aimed to "balance the books" within five years.
Public sector pay for those earning over $31,000 will be frozen for two years while a number of welfare benefits will be reduced.
Consumers were hit with a rise in VAT, the country's broad-based tax on sales and services, from 17.5 per cent to 20 per cent from next year.
Osborne described the budget as "progressive" and "tough but fair".
Hamish Macdonald reports from London.
Source: Al Jazeera