Spanish Prime Minister Mariano Rajoy has said the country will miss its budget deficit target for this year.
Mr Rajoy said Spain's deficit would be 5.8% of total economic output in 2012, higher than its agreed target of 4.4%.
He said the higher target still represented "significant austerity" and was "a sensible and reasonable decision that requires a great deal of effort, and is the result of others not reaching targets in the past".
The prime minister pointed out that the revised deficit target is still considerably lower than 2011's 8.5% deficit and added that "the aim is still to reach the 3% deficit target in 2013".
Last month he outlined 8.9 billion euros in new budget cuts, as well as tax increases designed to raise 6.3 billion euros.
But analysts said even hitting the new deficit target would not be easy.
"It's still a difficult objective in the absence of any traction in external demand," said Emilio Ontiveros at Analistas Financieros Internacionales in Madrid.
"Spain is going to depend a lot on the economic tone of its main commercial partners in the eurozone."
The country has the highest jobless rate in the EU, with almost one in four people out of work.