Cites turmoil in U.S., cost of climate measures
Bruce Campion-Smith
OTTAWA – Prime Minister Stephen Harper expects Canada's economy to suffer next year, buffeted by turmoil south of the border and the "cost" of new climate-change measures here at home.
In a calculated signal to Canadians, Harper said that 2008 will be "more challenging" for his government and the country.
"There remains very serious economic uncertainty in the United States and in other parts of the world, and it's impossible for me to see how Canada can be entirely immune from those developments," he said in a year-end interview with the Star.
While Harper has warned of uncertainty before, this is his strongest statement yet that economic problems will hit Canada in what many expect to be an election year.
As a result, Harper said the government is planning a "stand-pat" budget aimed at stability.
"We will have very much a stand-pat fiscal stance focused on stability, focused on paying down debt, which is what families and businesses do when they face a period of some uncertainty," he said.
His warnings came as the International Monetary Fund downgraded its economic growth forecast for Canada to somewhat less than the 2.3 per cent it forecast just three months ago.
In the United States, housing and credit woes have sparked fears of a full-blown recession. Earlier this month, TD economists warned that Canadian economic growth will "slow materially" in the months ahead.
In Canada, a rising loonie has accelerated the loss of thousands of high-paying manufacturing jobs. Ontario's manufacturing sector has been particularly hard hit, with the loss of 44,000 jobs in the first nine months of this year.
Harper also warned that climate-change measures that take effect next year "will start to bite.
"It will hit home the reality that you cannot reduce greenhouse gas – you cannot mandate it – without there being some economic cost in the short term," Harper said.
"We happen to believe we've set it up so that those costs are manageable, so that we provide incentives for firms and sectors to exploit the technology opportunities that this regime requires," he said. "But the fact of the matter is it will cost."
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