Prime Minister prepares the UK for huge cuts

David Cameron has today warned that the UK's budget deficit was far larger than anticipated and tough action would be needed to tackle it.

In a gloomy speech which seemed to prepare the ground for the scale of cuts in the public sector not seen in a generation, he warned the country had been living beyond its means for a decade and had no choice but to now pick up the bill.

Using the last Government's figures he said interest payments on the debt alone would reach £70billion a year within five years.

The Prime Minister said that the "momentous" decisions he will take will have "enormous implications" that will affect everyone.

Background briefings from the Treasury suggest that Chancellor George Osborne is studying the Canadian approach to a similar crises in the 1990s. The public spending was cut by almost 25%. Taxes also rose sharply.