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TORONTO (Reuters) - The government is open to the idea of including additional economic stimulus in its next budget if the European debt crisis threatens to derail the country's relatively successful recovery.
"We stand ready to respond again in a flexible and pragmatic manner if the economic challenges from beyond our shores begin to threaten jobs and the economy here," Flaherty said, according to the prepared text of a speech he was delivering in Toronto.
But he added a cautionary note: any additional stimulus will be targeted. The Conservative government will not abandon its goal of eliminating the budget deficit "in the medium term" and will forge ahead with plans to slim down government spending.
"So while we will act as necessary, we will always ensure that any government spending is targeted and effective," he said.
Flaherty repeated his view that the European sovereign debt and banking crisis is the No. 1 threat to Canada and urged his European colleagues to move aggressively to solve it "in double time".
Reporting by Claire Sibonney; Writing by Louise Egan; editing by Peter Galloway