|Osborne said that the job losses were 'unavoidable when the country has run out of money' [AFP]
Britain will cut 490,000 public sector jobs over four years under austerity measures designed to reduce the country's record deficit.
George Osborne, the finance minister, told parliament on Wednesday that the job losses were "unavoidable when the country has run out of money".
"Today is the day that Britain steps back from the brink. It is a hard road but it leads to a better future," he said.
He said he had ordered $130bn in spending cuts by 2015, aiming to reduce Britain's deficit of 11 per cent of gross domestic product (GDP) to around two per cent within five years.
The measures will also hit the welfare state, cutting child benefits and pushing the state pension to 66 by 2020.
The cuts come as figures reveal British public sector spending in September reached $25.5bn - a record high level for the month.
Analysts had initially forecast a slight rise from September 2009's public net borrowing of $24.4bn.
Small protests against the cuts are already taking place with larger marches and rallies scheduled to take place in London, the capital, later on Wednesday.
Nazanine Moshiri, Al Jazeera's correspondent in London, said demonstrations so far were not matching the scale of anti-austerity protests seen previously in Europe.
"We're not seeing anything like the kind of protests we've seen in the streets of Paris in the last few days.
"People here are looking at this as a way of blaming the previous government of the Labour party for what has happened, rather than blaming the current coalition government."
But she added the move was a "big gamble" for the Conservative-Liberal Democrat alliance.
"If the economy doesn't start to grow, who knows what could happen here," she said.
Ruth Lea, a British economist, told Al Jazeera that Wednesday's cuts were needed to reduce the deficit.
"If we don't cut now the generations to come will have to pay for all this," she said.
Lea added that the prospect of a "double-dip" recession was unlikely, saying: "Even though we talk about these enormous cuts they only mean one per cent year-on-year," she said.
The International Monetary Fund has strongly backed plans for an aggressive reduction of Britain's record high public deficit, describing spending cuts as an "essential" weapon.
But some economists have warned that the measures will tip Britain back into recession.
Mervyn King, the central bank governor, painted a gloomy picture late on Tuesday, saying it would be a long while before Britain could recover from the 10 per cent drop in output seen in the last recession.
|Alan Johnson, Labour's shadow finance minister, accused Osborne of 'economic masochism' [Reuters]
The opposition Labour Party, which the current Conservative-Liberal Democrat coalition government blames for running up Britain's massive debt when it was in power, has agreed there is a need for fiscal discipline.
But it says that the coalition are cutting too much too soon.
Alan Johnson, Labour's shadow finance minister, accused Osborne of "economic masochism", warning that his cuts would leave Britain trapped in a cycle of low growth and high unemployment for years.
Wednesday's measures will see spending cut across government departments, including the Foreign Office, which will lose 24 per cent from its budget, the police force, and the interior and justice departments.
The BBC is also being affected by the measures, with the government cutting funding to the World Service.
The plans are also extending to Britain's Queen Elizabeth II, with royal household spending falling by 14 per cent in 2012 to 2013.
However the National Health Service, schools and overseas aid have been protected under the spending review.
The National Institute of Economic and Social Research think tank has said it believes the government will only be able to push through half the planned cuts.