Spain\'s new right-leaning prime minister, Mariano Rajoy, vowed Tuesday to launch urgent reforms of the budget, labour market and banks by mid-February. The three reforms were the \"most urgent\" for Spain\'s economic recovery, said Rajoy, who has already started on a programme of spending cuts and tax increases to squeeze 40 billion euros ($50 billion) out of the budget. The Spanish leader, speaking in a joint news conference with European Union president Herman Van Rompuy, said his cabinet would likely approve legislation on all three major reforms between January 27 and February 10. Regional governments, which failed by a wide margin to meet their 2011 deficit-cutting targets, must be included in the budget reforms, the 56-year-old premier said. \"We will ask the regional governments to meet their deficit goals for 2012, that they have a spending ceiling and a debt limit,\" Rajoy said. \"We are ready if any of them have liquidity problems to come to their aid but in that case it would have to be in exchange for a programme that will guarantee those results,\" he said. Rajoy said last week that regional governments\' budget deficits would be equal to about 2.7 of gross domestic product in 2011 -- more than double their 1.3-percent target. In his latest estimate, he said on Tuesday their deficits would be 2.3 or 2.4 percent of GDP, although he said these were not final figures. Finance Minister Cristobal Montoro later said a Spanish bill aimed at limiting the deficits run up by the country\'s regions would punish those that fail to meet their targets. \"It\'s legislation that entails a balanced budget,\" Montoro told a press briefing. \"The entire public sector is subject to it, and it also includes a procedure to sanction\" those that fall short of their targets. The Spanish leader promised to launch a labour market reform, decrying the high level of unemployment in a country that reported a 21.5-percent unemployment rate in the third quarter of 2011. \"This needs a reform of labour legislation. We cannot live in a country where 22 percent of the people who want to work cannot do so, and 45 percent of young people.\" Banking reform would be crucial, he added. \"Restructuring of the financial system is urgent because the recovery of credit is capital to the recovery of the economy,\" Rajoy said. The premier called for measures to guarantee liquidity to countries meeting their reform commitments, saying tough reforms took time to have an economic impact. \"It cannot be that in a situation like this, economies cannot finance themselves.\" Nevertheless, Rajoy said, Spain must tighten its belt. \"We have to carry on cutting the public deficit, especially in a year like the one ahead, which is going to be very difficult,\" he said. \"But we have to accompany it with structural reforms and the maintenance of levels of liquidity without which it is very hard for economies to function.\" Van Rompuy agreed. \"Rajoy and I fully share the view that a reform agenda based on fiscal austerity alone is not enough,\" he said after the meeting. \"We need to focus also on growth and job creation,\" he added. \"We must urgently put in place an anti-recession strategy, mobilizing means and efforts at the Union level and at member states\' level.\" The European Union president called for measures to prevent the cash being cut off to business. \"We must avoid a credit crunch for our enterprises,\" he said, describing the European Central Bank\'s decision last month to offer three-year refinancing to eurozone banks at 1.0 percent interest as \"essential\". \"But we also need to mobilize all available EU financial resources in the most effective way to contribute to the proper financing of our economies,\" Rompuy said.