Deputy Prime Minister Nick Clegg has warned that the “age of plenty” is over and the country needs to prepare for a period of “painful” retrenchment.
With Chancellor George Osborne set to announce the first £6bn of savings to be delivered this year, Mr Clegg said the new coalition Government would need to keep its nerve as it embarked on the first of the spending cuts needed to tackle Britain's record £156bn deficit.
Despite having argued during the General Election campaign that the economy was too weak to start wielding the axe in the current year, the Liberal Democrat leader insisted his party was fully behind the programme.
“We will take responsibility for all the decisions as much as anybody in the Government,” he told BBC1's The Andrew Marr Show.
He launched a fresh attack on Labour, accusing the outgoing government of making a series of spending commitments it knew it could not afford to honour in the dying days before the election.
“The age of plenty where money could be thrown around in almost carelessness, which is what the outgoing Labour government has done for some time now, is over. Yes, it is over,” he said.
“There are going to be difficult decisions, they are going to be unpopular decisions, they are going to be controversial, we are going to have to hold our nerve.”
Mr Clegg said the crisis in the eurozone meant that they could not afford to wait until next year to begin tackling the deficit, as the Lib Dems had previously argued.
“I don't think anybody could have anticipated then quite how sharply the economic conditions in the eurozone would have deteriorated and that the need to show that we are trying to get to grips with this suddenly became much greater,” he said.
He said that the problems had been exacerbated by decisions taken by the former Labour government, apparently in anticipation that it would be defeated in the election.
“The outgoing Labour government was just throwing around money like there was no tomorrow, probably knowing that they were going to lose the election, making extraordinary commitments left, right and centre, many of which they knew they couldn't honour,” he said.
Mr Osborne has said that the “great majority” of the savings this year will be used to start paying down the deficit.
Press reports over the weekend suggested that £513m will come from a “bonfire of the quangos” — with organisations such as the Qualifications and Curriculum Development Agency set for the axe.
Vince Cable's Department for Business, Innovation and Skills looks set to be one of the big losers, with reported savings of £900m, while a further £200m could come from university funding.