The British economy is in a dire state and there will be difficult times ahead as the government takes action to tackle a record budget deficit, new finance minister George Osborne said.

Osborne took up the role this week after the centre-right Conservatives joined with the centre-left Liberal Democrats to form the country's first coalition government since 1945 and end 13 years of Labour party rule.

Although Britain has so far seen only an anaemic recovery from the worst recession since World War Two, the new government is under pressure to reduce spending and raise taxes to cut a budget deficit running at more than 11 per cent of GDP.

The coalition has already pledged to significantly accelerate the reduction of the deficit in the next five years, cutting 6 billion pounds ($8.75 billion) from non-frontline services this financial year.

'We do face an enormous economic challenge,' Osborne wrote in an article for Sunday's News of the World newspaper, published online late on Saturday.

'We won't be able to turn things around in a week or a month or even a year.'

'Our economic problems run very deep and there will undoubtedly be some difficult times ahead,' he added.

Osborne pledged to get to grips with wasteful government spending and said the coalition would act to ensure economic stability and keep mortgage interest rates low.-Reuters