Chancellor George Osborne, holds Gladstone's old Budget box for the cameras outside 11 Downing Street
Chancellor George Osborne, holds 19th-century Chancellor William Ewart Gladstone's old Budget box for the cameras outside 11 Downing Street, before delivering his first Budget to the House of Commons in London June 22, 2010.

The new Coalition government of UK has set out its plans to cut the huge structural deficit that it faces after Britain's deficit rose to 10.5 pct of GDP this year.

Outlining his vision for tackling the widening gap between Government borrowing and income, George Osbourne announced an ambitious cut in spending with over £40bn per year in savings to be made.

"I am not going to hide hard choices from the people, nor hide them in small print in the budget documents." said the Chancellor of the Exchequer as he took to the stand. "Structural deficit will reduce to 4.8 pct initially and be eliminated by 2015-16."

In order to fulfil his long-term goals, George said that the UK would need to go through the pain of spending cuts, adding, "Everyone will share in the rewards, we're in it together".

The full budget document can be found here however most of the changes have been well documented with some tax increases, pay freezes, as well as a bank levy. The biggest surprise came in VAT (Value Added Tax), which rose 2.5 pct to 20 pct.

However, most of the measures announced today were aimed at decreasing Government spending with child tax credits, disability allowance and housing benefit all affected in some way to reduce government spend.

Howard Archer, chief UK and European Economist for IHS Global Insight in London commented:

"This is a budget all about reining in the public deficits and returning government finances to a sustainable state by the end of this parliament."

David Milliband, a leadership candidate for the Labour Party who oppose spending cuts said the Budget was 'Bad for growth, bad for fairness.' and added that a more sensible gradually reduction in spending would have been enough.