By Mohammed Abbas and Tim Castle
LONDON (Reuters) - The leaders of Britain's governing coalition parties put on a show of unity on Monday, saying they would stay together until 2015 to try to reduce a large budget deficit despite policy differences over the European Union and state handouts.
Under pressure from supporters to reassert their own party identities, Prime Minister David Cameron, a Conservative, and Nick Clegg, his deputy and a Liberal Democrat, appeared together to list their past achievements and future aims.
Both poured cold water on the idea that policy differences over the possibility of repatriating powers from the EU, and over the pace and severity of budget cuts, had undermined their alliance or might one day rip it apart.
"This is a full five-year coalition. The public wants us to work hard on their behalf right through this parliament," Cameron said at a joint news conference with Clegg.
Ratings agencies and Britain's creditors have until now given the government's flagship austerity program time to work, but are monitoring the coalition closely for any sign it may falter in its commitments, get bogged down in internal bickering.
Clegg said the choice when they formed an alliance in 2010 had been to either "throw rocks at each other .... when we were teetering on the edge of an economic cliff" or to work together.
"What you rightly expect is for politicians to set aside their differences and just get on with the job," Clegg said.
With both parties badly trailing the opposition Labour party in opinion polls, supporters are calling for them to begin to disengage from one another ahead of an election in 2015 to boost their electoral prospects.
The left-leaning Liberal Democrats have seen their popularity slump due to policy compromises, while many Conservative lawmakers see the Lib Dems as a brake on the party's ambitions.
Presenting what they branded as a mid-term "stock take" two and a half years into their coalition, Cameron and Clegg listed the coalition's achievements to date.
These included cutting the budget deficit by a quarter, boosting private sector jobs, removing income tax from the lowest-paid and freezing local council and fuel duties, they said.
However, their main aim of staging a stable economic recovery from the 2008 financial crisis has remained elusive. Economic growth remains anemic and support for both parties has ebbed as voters' incomes have been squeezed.
Outside the news conference at Cameron's Downing Street residence, Labour activists distributed a spoof government publication labeled "A program for no change" with the sub-heading "Out of touch, unfair, incompetent".
"Their true record is one of failure. They failed on growth and jobs," the document said.
In the coming two and half years, Clegg and Cameron promised to limit the amount the elderly pay for long-term healthcare, reform state pensions, build more houses, help parents with childcare costs and find ways to boost investment in transport.
One factor keeping the coalition together is the prospect of electoral annihilation for the Lib Dems if they force an early election, given their current low poll ratings.
Cameron's stance on Europe could further strain ties, with the prime minister expected to make a key speech on Britain's relationship with the EU this month.
Cameron is under pressure to appease his increasingly euroskeptic Conservative colleagues' desire for looser ties with the bloc but must also be careful not to alienate his pro-Europe Lib Dem partners.
Asked about the pair's differences on Europe, Clegg said both leaders agreed on the need to reduce the EU's budget and on the need for EU reform.
(Editing by Andrew Heavens)
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