Liberal Democrat leader Nick Clegg has defended the timing of the budget cuts due to be announced this year.

The Deputy Prime Minister told Today presenter Justin Webb that, before the election, the Lib Dems had campaigned on a policy of cuts led by economic circumstances. On coming to power, those circumstances had proved to be "perilous".

"Everybody saw that an incoming British government... would have to assert sovereignty over these deficit reduction decisions," he said.

"There was a real threat to the UK government having its hand forced by market panic."

Mr Clegg outlined how he hoped to reform tax by closing avoidance loopholes and had a warning for banks that "no options were off the table" if they paid high bonuses.

"You cannot possibly award yourself ludicrous sky-high bonuses in an industry that has been bailed out by the tax payers, when those same tax payers are now having to make very serious sacrifices," he said.

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