Spain's Prime Minister, Jose Luis Rodriguez Zapatero, has warned more budget cuts may be be necessary to restore the country to economic growth.
Spain is struggling under a debt crisis brought and its unemployment rate of 20% is the highest in the eurozone.
Opening the annual state of the nation debate in parliament, Mr Zapatero urged lawmakers to back harsh budget cuts already announced, including cutting public sector pay, and raising the retirement age.
He said the moves were crucial to restore confidence in Spain on international financial markets, pull the country out of recession and return it gradually to economic growth, the BBC reports.
However, Mr Zapatero warned, more spending cuts could be coming first and also said raising the retirement age to 67 is inevitable.
Mr Zapatero says the government must slash its budget deficit, which stood at 11% of GDP at the end of last year, even if this restrains economic growth next year
Analysts expect Spain's minority government to get the measures through parliament with the backing of small regional parties.