Tough British budget will test coalition government

BRITAIN’S new coalition government produced the harshest budget in a generation yesterday, slashing spending, raising VAT and slapping a levy on banks to cut a record deficit to almost nothing in five years.

Analysts questioned whether Chancellor George Osborne’s “emergency” budget a month after taking office would plunge Britain back into recession given the scale of the squeeze, which lets virtually nobody off the hook.

The budget is likely to strain ties within the coalition – an unlikely alliance between the Conservatives and the Liberal Democrats – when the really big spending cuts actually start taking effect.