The 29-year-old from Oviedo, in Spain's northern region of Asturias, won the Formula One title in 2005 and 2006 when he was driving for Renault. He now drives for Ferrari.
Deputy Prime Minister Alfredo Perez Rubalcaba said cars running on gasoline will use 15 per cent less fuel at the new speed limit, saving an estimated £1.25 billion in oil imports.
Spain will also cut the price of commuter and short-distance rail tickets by 5 per cent to encourage drivers to leave their cars at home.
The decision to lower the speed limit, which is effective from March 7, has sparked fierce debate in Spain.
Prime Minister Jose Luis Rodriquez Zapatero urged Spaniards to support the measure.
But drivers associations have warned the measure may actually increase accidents on Spanish roads, as was the case when the speed limit was dropped to 68mph during the 1976 oil crisis.
Spain's conservative opposition Popular Party described the scheme as "Soviet" and said alterations to the nation's road signs would be time consuming and costly.
It also argued that Spain would lose out on £425 million in tax income.
Source: The Telegraph