Harper says economy "hard to read": report

Tue Dec 16, 2008 7:58am EST
 
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TORONTO (Reuters) - Prime Minister Stephen Harper, in perhaps his bleakest comments yet on the global economy, said the future has become increasingly hard to read and conceded a depression could occur.

The Prime Minister, in an interview with CTV News in Halifax, Nova Scotia, also confirmed that his Conservative government's January budget would push Canada into a deficit, while including billions of dollars in spending.

The government is set to release its budget on January 27.

"The truth is, I've never seen such uncertainty ...," the Globe and Mail quoted Harper as saying in the interview. "I'm very worried about the Canadian economy."

The Prime Minister also raised the possibility that a depression -- loosely defined as prolonged recession where output declines more than 10 percent -- might be possible.

"It could be, but I think we've learned enough from the 1930s to avoid some of the mistakes that caused a recession in 1929 to become a depression in the 1930s."

Talk of a deficit signals an about-face for Harper's government. The party's fiscal update in November was widely criticized by economists for striving too hard to show balanced budgets in coming years at a time when most experts argued that temporary deficits would help pull Canada through a recession.

The opposition parties refused to endorse it, leading Prime Minister Stephen Harper to request Parliament be shut down to January 26, rather than face a confidence vote.

($1=$1.23 Canadian)

(Reporting by Scott Anderson; Editing by James Dalgleish)

 
<p>Prime Minister Stephen Harper pauses while speaking as sleet falls at Rideau Hall in Ottawa in this December 4, 2008 file photo. REUTERS/Chris Wattie</p>