September 19, 2008 / 5:12 PM / 9 years ago

Harper worried by U.S., sees no domestic bailout

<p>Prime Minister Stephen Harper delivers his speech during a campaign rally at St. Volodymyr Cultural Centre in Oakville September 16, 2008.Mike Cassese</p>

OTTAWA (Reuters) - Prime Minister Stephen Harper said on Friday there were great concerns about the stability of the U.S. financial system but added he did not anticipate similar problems in Canada.

"I feel there are great concerns about stability of the American economic system," Harper told reporters, saying there was no need for Ottawa to bail out Canadian banks or financial institutions.

"The overall balance sheets of the Canadian financial sector remain very healthy," he said. "The best information I have ... is that the troubles in the financial sector of the United States should not spill over into Canada."

The United States is by far Canada's largest trading partner and slower U.S. consumer spending is already hitting Canadian industries.

"I certainly would not urge consumers to panic. Consumer spending in Canada has been very strong," Harper told a televised news conference in Farnham, Quebec.

Campaigning ahead of the October 14 general election, Harper has said that only the ruling Conservatives can be trusted to keep Canada stable as the U.S. crisis unfolds.

Polls show the Conservatives are likely to retain power and could even turn their minority government into a majority in the House of Commons.

Harper has also said there is no room for major tax cuts or spending initiatives, and has dismissed a plan by the opposition Liberal Party to introduce a carbon tax as a way to cut emissions of greenhouse gases blamed for global warming.

Liberal leader Stephane Dion has promised that cuts to income taxes and aid to poorer families would offset the carbon tax, one of the party's key platforms in the campaign.

The Liberals unveiled plans this week to spend C$70 billion ($67 billion) on critical infrastructure improvements over the next 10 years, prompting the Conservatives to ask how they would raise the money.

A Harris-Decima survey for the Canadian Press on Friday put the Conservatives at 38 percent support with the Liberals at 25 percent, while a daily tracking Ekos poll had the gap at 36 percent to 25.

Under Canada's first-past-the-post electoral system a party needs around 40 percent of the vote to win a majority of the 308 seats in the House, but that number can drop slightly if the closest opposition party is at least 10 percentage points behind.

The Conservatives went into the campaign with a larger lead but this has been whittled away amid a series of gaffes.

Harper brushed off pressure to fire Agriculture Minister Gerry Ritz, who was caught making off-color jokes about a listeriosis food-poisoning outbreak that has been linked to the deaths of at least 17 people.

A major union representing 1,800 food inspection workers on Friday demanded Ritz resign.

($1=$1.04 Canadian)

Reporting by David Ljunggren; editing by Rob Wilson

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