Pedro Passos Coelho, Portugal’s prime minister, said on Sunday the government would have to make big cuts in spending on health, education and social security to keep the country’s €78bn bailout programme on track after the constitutional court rejected austerity measures considered essential to meeting mandatory deficit targets.

In a televised address, the prime minister said the court’s rejection of planned austerity measures posed a serious risk to Lisbon’s ability to comply with the adjustment programme and its effort to regain access to international bond markets by a September deadline.

To compensate for the effect of the decision on the national accounts, he had no alternative but to make additional spending cuts that would have a significant impact on the welfare state, he said. The budgets of state-owned companies would also be cut, he said, but he ruled out further any further tax increases on top of record tax hikes introduced in January.