Chancellor George Osborne moved to tackle Britain's record £163 billion deficit today with a promise to reveal next week where the axe will fall on £6 billion of spending this year.
An emergency Budget will be held on June 22 - six weeks on from the formation of the Con-Lib coalition Government - but more details of the first swathe of savings will be published on Monday.
Ministers have been ordered to review every new spending decision made by Labour this year in a bid to identify ways to slash more from the Whitehall bill.
Mr Osborne said the immediate cutbacks are backed by the Bank of England and the Treasury and failing to act quickly would be "disastrous" for the economy.
A new watchdog, which will take over the job of making economic forecasts, has begun work on an independent audit of the public books to inform next month's Budget.
Trade union leaders condemned the speedy cuts - warning they would put the "fragile" recovery from recession at risk and accusing ministers of "fiscal fascism".
Bob Crow, general secretary of the RMT union, said: "The Tories have always been the party of mass unemployment because that suits their class and keeps the workers under the cosh.
"This is fiscal fascism in all its Thatcherite glory and, even worse, it is being propped up by the Lib Dems," he said, calling for Labour and its allies to launch a fightback.
David Laws, the Liberal Democrat Treasury Chief Secretary who appeared alongside Mr Osborne at a press conference to outline the plans, defended his party's backing of the £6 billion cuts.
"What's changed our minds is not only the compromises you have to make if you are working in a coalition... but also the clear advice we have received from the Bank of England and the Treasury itself that it would be responsible and safe to make these adjustments without risking the economic recovery which is under way," he said.
Mr Laws said he had already rejected some suggestions for cuts which he felt would "damage key services or put at risk those on lower incomes" and would continue to do so.
Sat with the politicians was economist Sir Alan Budd who heads the new Office of Budget Responsibility (OBR), which will take responsibility from the Chancellor for setting the economic growth and government borrowing forecasts on which the Budget calculations are based.
Accusing Labour of "fiddling" the figures to hide the true state of the problems, Mr Osborne said: "We need to fix the Budget to fit the figures, not fix the figures to fit the Budget."
His criticisms drew an angry retort from outgoing chancellor Alistair Darling, who said the attempt to blame Labour was "straight out of Yes Minister".
"The suggestion that Treasury civil servants colluded with us in publishing anything other than accurate figures is just wrong," he told BBC Radio 4's The World at One.
"The Conservatives and Liberals are playing the oldest trick in the book. What do you do when you are a new government? You blame your predecessors. It is straight out of Yes Minister.
"It looks like they are going to have to put taxes up, they want to make pretty heavy cuts in public expenditure and they are naturally looking to blame someone else."
Mr Osborne was forced to defend plans to sharply raise capital gains tax (CGT) on non-business assets amid criticism from a former cabinet minister who advised the Tory opposition on tax reform.
Lord Forsyth said increasing the rate to 50% would have a "very devastating effect" on people such as those who bought buy-to-let properties to fund their retirement.
He also criticised the decision, as part of the coalition deal, to abandon a Conservative plan to exempt estates worth up to £1 million from inheritance tax.
"What happens with inheritance tax (IT) is that it hammers people whose only asset is their family home. That again is the middle classes and it is the core Conservative vote," he said.
The Chancellor said CGT reform is unavoidable because of the "enormous amount of income shifting" happening by people looking to avoid paying income tax, which attracts much higher rates.
"That was going to be a problem facing any new government," he said.
Mr Osborne said that while the IT threshold rise had been dropped, the coalition deal included a "very substantial piece of assistance" to middle earners through higher income tax allowances.
He suggested there remains a "fighting chance" of getting Commons approval for proposals for a modest tax break for married couples after the Lib Dems agreed to abstain in any vote.
An aim that 80% of savings should come from spending and 20% from tax rises remained a "broad rule of thumb", he said, although the Liberal Democrats have secured agreement that some of this year's £6 billion savings should be spent on boosting the recovery.
But he would not be drawn on the prospects of a VAT rise in the emergency Budget - declining to add to comments by Prime Minister David Cameron yesterday that it was "not something we plan to do".Reuse content