New coalition government plans to speed up efforts to reduce the Budget deficit

The Liberal Democrats have conceded to a “significant acceleration” of spending cuts, including a £6bn Budget reduction this year.

New prime minister David Cameron has agreed a coalition with the Liberal Democrats and is preparing to set out his agenda for the next parliament. However, some details have started to leak out.

Among the worst news for the industry is that there will be a “significant acceleration” in the efforts to reduce the budget deficit, according to Conservative sources.

The Tory party’s controversial plans to cut £6bn of spending this year, which was opposed by Labour and the Liberal Democrats who feared a double-dip recession, will go ahead.

Mervyn King, Bank of England governor, has given his stamp of approval for the deficit reduction plan, suggesting the additional £6bn of cuts will not put at risk economic growth this year and is crucial to reassuring the financial markets.

At the Bank's quarterly Inflation Report press conference, he called the plan “strong and powerful”.

Brendan Barbour, the TUC's secretary general, however, has voiced concern that the deficit cuts could be "bad for services and jobs", putting at risk the economic recovery.

Meanwhile Labour’s plan to raise National Insurance is expected to be at least partly scrapped, though more details are yet to emerge as to what the exact compromise will be.

An emergency Budget is expected to take place within 50 days.