Britain's new coalition government cut its own pay by five percent on Thursday in a sign of the tough medicine the country faces to bring down a record budget deficit.

The centre-right Conservatives and smaller centrist Liberal Democrats agreed on Tuesday on what critics call an unstable partnership of expedience after an inconclusive election.

Reducing Britain's record budget deficit of over 11 percent of national output will be the first test of the relationship.

Ministers met around the cabinet table for the first time on Thursday and promptly awarded themselves a pay cut.

Prime Minister David Cameron will see his annual salary cut to 142,500 pounds ($210,500) from 150,000, while senior ministers will be paid just under 135,000 pounds -- a very healthy salary in Britain.

Ministers' pay will be frozen for the five-year lifetime of the parliament in measures expected to save a total of three million pounds -- a drop in the ocean when weighed against a deficit forecast to reach 163 billion pounds this year. Markets are looking for signs the Conservative-led coalition will act quickly to reduce the deficit by trimming public spending, initially by 6 billion pounds this financial year.

"We are all very aware of the seriousness of the situation and frankly if we don't have a credible programme to reduce the deficit...then we won't have the confidence of the markets and the confidence of the country," Culture Secretary Jeremy Hunt told reporters after the hour-long meeting.

The Conservative manifesto contained a pledge to freeze pay for public sector workers next year, excluding the one million lowest paid.

The government has promised an emergency budget within 50 days. Cameron said on Wednesday the government had the worst economic inheritance of modern times in Britain.

(Read by Lee Hannon. Lee Hannon is a journalist at the China Daily Web site.)

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(Agencies)