Spain's incoming prime minister Mariano Rajoy put job creation at the heart of his keenly awaited keynote speech to the Spanish parliament on Monday.

Rajoy said he was committed to stimulating employment, saying Spain's staggering jobless rate had risen to around 23 percent overall and around 46 percent for people under 25.

"I propose to dedicate all the efforts of the government and of the nation to stop the haemorrhaging of jobs, stimulate growth and assist the creation of employment," he said.

"This is what the voters have demanded, this is what Europe demands, this is what Spain urgently needs. And this is what will be the keystone of our recovery," he added.

The country is also facing a record 16.5 (b) billion euro deficit - which he was adamant would be reduced by 2012.

But he did not specify what bitter cocktail of spending cuts or tax rises might be used to get the deficit down to Spain's stated goal of 4.4 percent of GDP in 2012.

The deficit was 9.2 percent of GDP last year and estimated by the outgoing Socialist government to be about 6 percent his year - a figure Rajoy suggested may be too optimistic.

This is because the economy posted no growth in the third quarter.

That stagnation prompted the outgoing Spanish government to join the EU, the IMF and many economists in lowering its growth estimate for this year from 1.3 percent to 0.8 percent.

Rajoy also announced tax changes to help self-employed people and small and medium-sized companies, and said banks heavily exposed to the burst real-estate bubble needed to get rid of thousands of unsold homes they have on their hands.

He said he also envisions further consolidation in a sector where troubled savings banks have merged from 45 to fewer than 20 over the past two years.

Rajoy also promised regulation not only to ensure that banks maintain higher levels of capital but also to change the supervision of the sector by the Bank of Spain.

Rajoy's Popular Party won November 20 elections by a landslide over the ruling Socialists, whose candidate was Alfredo Perez Rubalcaba.

The party was trounced at the polls, as voters punished the socialists for their handling of the economic crisis.

Rubalcaba addressed parliament on Monday, as the parliamentary spokesman in the new legislature.

Rubalcaba repeatedly asked Rajoy to give more explicit details about how he suggested Spain get out of the present economic situation, and said that cuts alone would not dig Spain out of the slump.

Rajoy has a comfortable majority in Parliament and will be voted in as premier on Tuesday, then will be sworn in by King Juan Carlos on Wednesday.