The PM and Deputy Prime Minister Nick Clegg opened the 9am meeting by emphasising their commitment to working together and highlighting the strong shared agenda.
New Chancellor George Osborne then updated ministers on the economy, stressing the priorities of tackling the deficit, and demonstrating that the UK was “open for business”.
He added that he would be working closely with Business Secretary Vince Cable on banking reform.
There were discussions on foreign policy, including the situation in Afghanistan, and the parliamentary timetable.
The meeting ended with the Cabinet agreeing to a five percent pay cut for all ministers and a ministerial pay freeze for the lifetime of the Parliament.
Last night the PM, Mr Clegg and other senior Cabinet ministers attended their first meeting of the Government’s new National Security Council.