Anti-austerity protesters in Pamplona hold up a mock coffin reading 'I need to act' in Basque on Saturday.

One month after the sweeping election victory of his conservative Popular Party, Mariano Rajoy is expected to use his inauguration speech Monday to rally support for his program of austerity before taking his oath of office Wednesday and announcing the members of his cabinet Wednesday or Thursday.

The veteran politician is taking charge just after the European Union's latest effort to shore up confidence in the common currency—an agreement to enshrine stricter budget controls in EU law—has fallen flat and investors have resumed their selloff of euro assets.

Though the Spanish government's borrowing costs have remained stable, mounting stress took its toll on Spanish regional authorities last week as Valencia struggled to sell a new bond and Catalonia said it might have to cut December compensation for its employees.

In keeping with the deeply cautious style he displayed in the run-up to the Nov. 20 elections and since then, Mr. Rajoy's inaugural speech likely won't give a lot of concrete details on his budget-cutting plans because he doesn't yet know the true state of Spanish finances, party officials say. Evidence has been mounting in recent months that Spain will exceed its 2011 budget deficit target of 6% of gross domestic product.

More important will be the message Mr. Rajoy delivers to Spanish society about the need for collective sacrifices to overhaul an ailing economy grappling with a towering debt load and a 21% unemployment rate. Analysts say the occasion calls for a rousing speech. "I hope he calls for blood, sweat and tears, because that's what's required," said Emilio Lamo de Espinosa, sociology professor at Madrid's Complutense university.

Though Mr. Rajoy had taken pains not to scare voters until recently, last week he hinted at a harsher new tone when he said budget cuts like those of Catalonia could provide an example to follow. Spain's most indebted regional government has cut wages, closed public-sector companies and started charging for services previously provided free of charge by state health and education systems. "We will have to make decisions, and some of them will not be nice," Mr. Rajoy told journalists.

Still, the speech is expected to give some new details, such as the ministries that will make up Mr. Rajoy's government. He has suggested he will eliminate some current ministries, and local media have reported that the Culture Ministry could get the ax. Party officials say Mr. Rajoy will also give some deadlines for presenting, for example, a 2012 budget and a plan to restructure government in highly decentralized Spain.

Following Spain's transition to democracy 30 years ago, the country created 17 regions and proceeded to devolve powers to them from the central government. Though defenders of the system say it is a more accountable and responsive form of government, critics say it has brought a cumbersome and expensive replication of many institutions, including the creation of 17 regional parliaments and state-financed television stations.

The Madrid-based Circulo de Empresarios think tank forecasts that Spain's 2011 budget deficit could come in at around 7.4% of GDP, presenting Mr. Rajoy with a mammoth challenge in meeting the country's 2012 budget-deficit target of 4.4% of GDP. "For savings of the order of €30 billion ($39 billion), the adjustment can't be limited just to the central government," said Gregorio Izquierdo, the Circulo's head of economics research. "There has to be a rethink of Spain's whole territorial structure."

Mr. Rajoy's inauguration speech will also likely contain messages for Spain's EU partners and international investors. He will reiterate his commitment to meeting promised budget targets but will demand a seat for the euro zone's fourth-largest economy at the top decision-making table, currently dominated by France and Germany.

Mr. Rajoy has been critical of what he considers the passivity of outgoing Prime Minister José Luis Rodríguez Zapatero. In recent weeks, he has met with French President Nicolas Sarkozy and German Chancellor Angela Merkel, who, like Mr. Rajoy, belong to conservative parties. Analysts say this ideological affinity lends Mr. Rajoy credibility in their eyes.

José M. de Areilza, law dean at the Instituto de Empresa business school, says it is necessary for Spain to be at the EU's control center. "That way, decisions that affect you are not just taken, but you participate in them," he said.

For some analysts, Mr. Rajoy's most important decisions this week will be his picks for top cabinet posts, including finance minister and foreign-affairs minister. The former will face the dual challenge of spearheading tough economic reforms at home and defending them abroad, while the latter must help raise Spain's profile in international policy-making bodies. Mr. Rajoy has given few clues on his choices other than to say he will pick the most qualified professionals for the job, even if they don't belong to his party.

"The first decisions Mr. Rajoy will make are choosing his ministers," said José Ramón Pin, management professor at IESE business school. "They must inspire the confidence of business people, investors and European leaders."