Hundreds of coal miners have marched from northern Spain to the centre of Madrid to protest against cuts in mining subsidies they say will put them out of work, as public discontent over austerity measures grows.

"Without the mines we don't have anything, absolutely nothing in our region," said one of the miners in the protest, Albano Gonsalvez.

It comes as Prime Minister Mariano Rajoy announced new taxes and spending cuts on Wednesday as recession-plagued Spain struggles to meet tough targets agreed with Europe.

Rajoy, of the centre-right People's Party, wants to slash 65 billion euros from the budget deficit by 2014 and proposed a 3-point hike in the main rate of Value Added Tax on goods and services to 21 per cent.

He also outlined cuts in unemployment benefit and civil service pay and perks in a parliamentary speech interrupted by jeers and boos from the opposition.

Pensions were not touched, as he kept his election promise, and said the tax burden was being shifted from direct taxes on labour and income to taxation on consumption. He also pledged in his campaign last year not to raise VAT, but said he now had no choice.

The Spanish PM told parliment: "These measures are not pleasant, but they are necessary. Our public spending exceeds our income by tens of billions of euros."