Economy may need years of stimulus

Fri Jan 9, 2009 3:23pm EST
 
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By Randall Palmer

OTTAWA (Reuters) - The extraordinary economic turmoil facing Canada and the world may require up to five years of "big, comprehensive" stimulus and other measures, Prime Minister Stephen Harper said on Friday.

"We're in an unprecedented period. We're going to work on the assumption that it is going to be a tough time, that we should not underestimate the actions we need to take," Harper said after participating in a business round-table in Montreal.

"We'll take big, comprehensive actions. We'll assume that we're probably going to have to look at a period of three to five years of such actions. It won't necessarily be that long, but we're not going to underestimate the situation. We're going to do whatever is necessary."

He and Finance Minister Jim Flaherty have been preparing the ground for the January 27 federal budget which will end 12 years of surpluses, despite their assurances before the October federal election that deficits would not be necessary.

Flaherty told reporters in Toronto on Friday that he would be budgeting for substantial deficits.

"There is a recognition that we have a synchronized global recession. We are in uncharted waters. There's a high degree of uncertainty," he said.

Asked if the Conservative government might cut checks to Canadians -- as President George W. Bush did last year in a bid to stimulate the U.S. economy -- Flaherty indicated he was leaning more toward tax cuts.

"I'm not going to start ruling out options. I can tell you what we've in fact been looking at is what we've been hearing from Canadians in consultations like this," Flaherty told reporters before heading into pre-budget consultations.   Continued...

 
<p>Canada's Prime Minister Stephen Harper speaks to the media in Toronto in this December 20, 2008 file photo. REUTERS/Mark Blinch</p>