The conservative prime minister added he would not call a snap national election as a result of the political crisis and ruled out using mediation to resolve it.
Meanwhile, protesters dressed in white and called for talks between the Spanish government and Catalonia in order to defuse the country's worst political crisis since the civil war last century. But on Sunday, a sea of Spanish flags, interspersed with some Catalan and European Union flags, dominated Barcelona's boulevards.
Some European officials are also anxious that any softening in Spain's stance towards Catalan independence could fuel secessionist feelings among other groups in Europe such as Belgium's Flemings and Italy's Lombards.
Within hours CaixaBank, Spains third-biggest lender and Catalonias biggest company, said its board had chose to move its registered office to Valencia.
The wealthy northeastern region of 7.5 million people, which has its own language and culture, held an independence referendum on October 1 in defiance of a Spanish court ban.
"It's reached a turning point and we need to get actively involved in the defence of Spain's values as a nation", added 52-year-old Joaquin Penas, an off-duty cavalry colonel with a Spanish flag draped round his shoulders.
The Spanish government sent thousands of national police into the region to prevent the vote. Spanish Prime Minister Mariano Rajoy, meantime, must decide whether to preemptively reassert control, as some of his main allies are urging him to do.
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"This risks escalating further if the Catalan government declares independence and the Spanish authorities respond with more police force", Gray argued.
The struggle over Catalonia represents a breakdown of the political pact that has held together modern Spain.
GettyTens of thousands rallied against the region's independence bid from Spain.
On Saturday, Rajoy said that the government would resist the declaration of independence and protect the country's unity and sovereignty taking all necessary steps causing as less harm as possible to achieve these goals.
Article 155 of the Spanish Constitution outlines how the central government in Madrid would suspend home rule or regional government in one of Spain's 17 autonomous communities.
He added: "I want to say something with absolute clarity - while the threat of independence is in the political landscape, it will be very hard for the government to not take these decisions".
People who were wearing white were backing the slogan, "Shall we talk?" which Jordi Cuixart, president of one of the one of the grassroots groups driving Catalonia's separatist movement, told the Guardian was a call to Spanish politicians.
Catalonia's referendum law establishes an "exceptional legal regime" that "prevails hierarchically overall norms which it may conflict with", meaning it overrides other laws.