The new coalition government in Britain has presented tough austerity measures to try to bring down the massive budget deficit. The Conservative Chancellor of the Exchequer, George Osborne, told Parliament that spending cuts and tax rises were vital to tackle the deficit which is one of the largest in the developed world. Among the measures announced are a two and a half per cent increase in VAT sales tax, cut in welfare spending, a freeze on public sector pay and levy on banks. Mr. Osborne warned that some government departments could face reductions of as much as 25 per cent.