Canada warns economic rebound fragile

Tue May 18, 2010 2:41pm EDT
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By Louise Egan and Farah Master

OTTAWA/SHANGHAI (Reuters) - Top Canadian officials warned on Tuesday that the global economic recovery is in a fragile state, as they stepped up their push against a global bank tax with speeches in China, India and the United States.

The campaign included a speech by Finance Minister Jim Flaherty in Mumbai in which he warned that economies battered by the global downturn remain at risk.

"We need to be very conscious that we have been through a very difficult time, and the difficult time is not yet clearly behind us," the Canadian minister told a business group in India's financial capital.

"The recovery that we have seen in those countries that went through a recession, including Canada, is a fragile recovery. There are indications of recovery, but no clear indications of an entrenched recovery."

Flaherty reiterated Canada's opposition to a global bank tax, urging his Group of 20 partners to drop talk of a the idea so they could focus on what he called the main issue of financial sector reform -- capital and leverage standards.

"Quite frankly (the bank tax) it's an idea that is not going to obtain the kind of universal support that perhaps some thought it would obtain," he later told reporters on a conference call.

He said proposals for a levy on banks to offset future crises was a distraction that was slowing much-needed reforms that the G20 has promised to adopt by the end of this year.

Canada will host the meeting of G20 leaders in Toronto next month and at least one country, Germany, has said it will renew its push for a bank levy at that venue.   Continued...

<p>Canada's Finance Minister Jim Flaherty speaks during a news conference in New Delhi May 17, 2010. Flaherty is on a three-day visit to India. REUTERS/B Mathur</p>