British cutbacks coming: Cameron

British Prime Minister David Cameronis warning Britons to prepare for the country's deepest spending cuts since the Second World War.

In one of his first policy statements since being elected last month, Cameron said Monday that the country's fiscal situation is even more dire than what the previous British government let on.

Britain posted a budget shortfall of nearly $240 billion last year.

"How we deal with [that] will affect our economy and our society indeed, our whole way of life," Cameron said at a university in Milton Keynes.

The country is paying more than $60 billion a year in interest payments just servicing its debt. But that isforecast to rise to roughly $110 billion within five years.

"Today we spend more on debt interest than we do on running schools in England," Cameron said."But[$110] billion means spending more on debt interest than we currently do on running schools in England, plus climate change, plus transport."

The Conservative/Liberal Democrat alliance government is not set to lay out its first full budget until June 22. That's expected to contain details of specific spending cuts and new tax increases.

More details will be released in the coming weeks, but onMonday, Cameron hinted public sector workers are in for significant cuts aimed at bringing salaries "back into line" with the private sector. He noted that MPs have already accepted five per cent pay cuts.

"Yes, it will be tough I make no bones about that," Cameron said."We'll get through this together and Britain and all of us will come out stronger on the other side."

Governments across the world have begun to tackle their ballooning debt loads, fearful of becoming the next domino to topple into the fiscal tailspin that Greece and other nations have fall into in recent months.

Speaking to reporters in Toronto Mondayon the upcoming G20 summit, Canadian Finance Minister Jim Flaherty applauded the governmental belt-tightening.

"The cycle of reckless spending cannot continue," he said. "Governments have to fiscally consolidate and demonstrate their resolve to do so."

Other European nations unveiled austerity plans of their own on Monday. Germany, which does not have a deficit, nonetheless moved to cut welfare benefits, introduce new taxes and shed 10,000 government jobs to save $96 billion on Monday.

"The last few months have shown in connection with Greece and other euro states what outstanding significance solid finances have, that they are the precondition for being able to live in stability and prosperity," German Chancellor Angela Merkel said.

Nearby Romania also unveiled a proposal Monday that would see the EU nation cut public wages by25 per centand pensions by 15 per cent, but it was met by a non-confidence vote in parliament, and protests by hundreds outside the parliament buildings