Rajoy: Spain's deficit reduction is urgent Spanish Prime Minister Mariano Rajoy has admitted his country has a huge task ahead to get its finances back on track, but there is not alternative. Stepping up the rhetoric in support of painful austerity moves, Rajoy told the parliament in Madrid that in a "difficult and complicated situation" the spending cuts and higher taxes are less painful than a bailout. He said: "Spain urgently needs to reduce the public deficit in order to meet its targets with the European Union and in order to boost economic growth and job creation. Therefore we have to reduce the public deficit. So, instead of borrowing 90 billion euros, as we did in 2011, this year we will have to ask for 60 billion and we will also have to reduce the deficit from 8.5 to 5.3 and the only way to do this is by reducing expenditure or increasing income. The austerity measures have led to huge protests and are hitting the economy which officials expect to shrink 1.7 percent this year. Spain's health service and education system seem to be next in line for cuts, a move that will anger many who consider the welfare state as sacred. Economy Minister Luis de Guindos recently said the government is considering "reforms" to save an additional 10 billion euros. Schools and hospitals are run by Spain's regional governments, which have frequently failed to meet previous spending cut targets. Rajoy also unveiled a new anti-tax fraud plan which will prohibit cash payments of over 2,500 euros in cash. More about: Austerity, Financial Crisis, Recession, Spain, Spanish economy