David Cameron, Britain’s new prime minister, declared that the creation of his coalition government marked the start of a “historic and seismic shift” in British politics as he sought to bury his party’s rivalry with his new partners, the UK’s Liberal Democrats.

One day after taking over from Gordon Brown as premier, Mr Cameron said his new alliance with Nick Clegg, the Lib Dem leader, would last five years and would be based on “strong and stable leadership”.

On his first day in office, Mr Cameron sought to present his government as a partnership with Mr Clegg, who, until a few days ago, had been one of his two main rivals. At a good-humoured press conference at 10 Downing Street both committed themselves to working together in what they believe is a new example of inter-party co-operation in British political life.

The new coalition has been forced on Mr Cameron by the nature of last week’s inconclusive general election result in which the Conservatives failed to win an overall Commons majority. That has forced Mr Cameron to forge a coalition with the Lib Dems in order to have enough MPs to back his premiership.

The Lib Dems have been given five cabinet posts in the government, with Mr Clegg appointed deputy prime minister, with the task of pushing through electoral reform. Vince Cable, the Lib Dems’ economy spokesman, has been given the role of business secretary, and Chris Huhne, another leading party figure, has been put in charge of energy and the environment.

Most of the big posts went to Mr Cameron’s Conservative allies. George Osborne becomes chancellor of the exchequer, or finance minister, William Hague foreign secretary, and Theresa May home secretary. Other appointments include Ken Clarke as lord chancellor and justice secretary, Liam Fox as defence secretary and Andrew Lansley as health secretary.

The new coalition is the first in Britain since Winston Churchill’s wartime alliance ran the country from 1940 to 1945. It is the first time the Lib Dems have been in a peacetime government since 1935.

At an open-air news conference in the garden behind 10 Downing Street, Mr Cameron and Mr Clegg stood side by side and forgot the animosity and insults of the close-fought election campaign, laughing at each other’s jokes and using first names.

Hailing a new era, Mr Clegg said: “We need to rebuild not only the public finances but we also need to rebuild the British economy on new sustainable foundations out of the rubble of the old economy.”

Mr Cameron, for his part, said the broad-based coalition was essential to tackling the huge budget deficit facing the UK.

“No government in modern times has ever been left with such a terrible economic inheritance,” Mr Cameron told reporters. “We know there will be difficult decisions ahead.”

In spite of big differences on policies as varied as tax, immigration and nuclear weapons, the parties said they had agreed a policy programme that will be stable and lasting.

The coalition’s plans include the introduction of a banking levy; a commission to investigate the possibility of separating retail and investment banking; and plans to give the Bank of England a direct role in measures to tackle long-term threats to financial stability and a watching brief over day-to-day bank supervision.

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