Flaherty urges progress on European crisis

Fri Oct 21, 2011 12:08pm EDT
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By David Ljunggren

OTTAWA (Reuters) - Canadian Finance Minister Jim Flaherty said on Friday he was very concerned about delays in addressing the European debt crisis because it could endanger the global economy, but he remained confident of modest North American growth

"We need to get to the goal and delay is the enemy. All they have to do is look at the markets, look at the bond spreads, look at what is happening to certain countries in the world that are going to have to bear an awful lot of the premium to borrow money, so we need to sort that out and get to a conclusion," Flaherty told reporters.

The rift between Europe's two biggest powers -- France and Germany -- has forced leaders to tack on an extra summit to address the region's debt crisis in the coming week.

France's push to use more European Central Bank money to fight the euro zone debt crisis ran into strong resistance from Germany and other EU partners on Friday, leaving Paris increasingly isolated before a crucial summit.

They will now meet twice -- on Sunday and Wednesday -- to adopt a comprehensive strategy to fight the crisis that began in Greece, spread to Ireland and Portugal and is now threatening to engulf bigger economies in the 17-nation currency area.

Flaherty said that while the European crisis threatens global economic growth, he remained confident there would be modest growth in North America in the next little while, and he shrugged off an unexpectedly strong rise in Canadian inflation data released on Friday.

Canada's annual core inflation rate jumped in September to its highest level in nearly three years, causing traders to scale back expectations of a possible central bank interest rate cut this year or next.

Flaherty noted core Canadian inflation remained within the Bank of Canada's 1 to 3 percent comfort zone despite the September uptick, adding that he is more concerned about growth than inflation.   Continued...

<p>Canada's Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Parliament Hill in Ottawa October 20, 2011. REUTERS/Chris Wattie</p>