LONDON - Britain's first coalition government since 1945 unveiled its ministerial team on Wednesday and sketched out its main policy goals with a core task being to cut the country's record budget deficit.
New Prime Minister David Cameron's Conservatives and the Liberal Democrats struck a coalition deal that aims to overcome their ideological differences, but which critics say could lead to instability.
"This is going to be hard and difficult work. A coalition will throw up all sorts of challenges," Cameron said in his first speech as leader. "But I believe together we can provide that strong and stable government that our country needs."
The agreement, reached early on Wednesday five days after an inconclusive election, ended 13 years of rule by the Labour Party under Tony Blair and his successor Gordon Brown.
The coalition must cut a budget deficit running at more than 11 percent of GDP. It is expected to adopt Conservative plans to cut 6 billion pounds of spending this financial year, earlier than the Liberal Democrats wanted.
"There is going to be a significant acceleration in the reduction of the structural budget deficit," new finance minister George Osborne told reporters. "We are going to undertake long-term structural reforms of the banking system, of education and of welfare."
Markets welcomed the agreement, hopeful a government led by the centre-right Conservatives will take swift action to cut the country's debts. Gilt futures jumped and sterling enjoyed a strong performance overnight, losing some ground later to trade broadly steady against the dollar.
The Conservatives are traditionally seen as hawkish on defence, and stocks in the sector were up 2.35 percent on the FTSE 350 index.
Cameron and Liberal Democrat leader Nick Clegg, the new deputy prime minister, were due to speak at 2:15 p.m. ET.
Former Conservative deputy leader William Hague is the new foreign secretary and Ken Clarke will run the justice department.
Other key appointments include Conservative Theresa May as home secretary and Conservative Liam Fox as defence secretary. Lib Dem Vince Cable, a former economist, is expected to have a role overseeing banking and business.
The LibDems were celebrating after decades spent in the shadow of Labour and the Conservatives.
"There will of course be problems, there will of course be glitches. But I will always do my best to prove new politics isn't just possible, it is also better," Clegg told reporters.
LibDem politician David Laws, one of the key negotiators during the coalition talks, said the agreement balanced the need for cuts with plans to protect the economic recovery.
Cameron, a 43-year-old former public relations executive, took over as prime minister after Brown admitted defeat in efforts to broker a deal with the LibDems. He is Britain's youngest prime minister in almost 200 years.
Conservative politicians took to the airwaves on Wednesday morning to highlight their new good ties with the LibDems.
Hague said there were no big differences among the coalition on Afghanistan, where Britain is fighting an unpopular war.
He also said neither side favoured handing more powers to the European Union. The EU was seen as a stumbling block to a deal between the pro-EU LibDems and the anti-EU Conservatives.
"All British governments sometimes face difficulties over European policy, but given the discussions we have had and the agreement that I have just outlined, we certainly don't start off with it as a difficulty," Hague told the BBC.
The Conservatives are parliament's largest party after last week's election but fell 20 seats short of an outright majority. With the LibDems, they will have a majority of 76 seats.
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