Harper fears Europe, U.S. problems to get worse

Thu Jan 26, 2012 12:34pm EST
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(Reuters) - Canada is very concerned about the economic problems facing Europe and the United States and fears they could become even more severe in future, Prime Minister Stephen Harper said on Thursday.

Harper told the World Economic Forum in Davos that the uncertain international outlook meant he would focus on boosting the Canadian economy by cutting red tape as well as slowing the growth of spending.

Canada is particularly impatient with what it sees as foot-dragging by euro zone countries and has urged Europe to do what it takes to solve its debt crisis.

"We remain very concerned about the continuing instability of the global economy," Harper said in the prepared copy of remarks to a Davos audience.

"The problems afflicting Europe - and for that matter the United States - are not only challenging today but, in my judgment, threaten to be even greater problems in the future," he continued.

Canada's right-of-center Conservative government is due to bring down its next budget by the end of March. Harper said that in the months to come Ottawa would unveil "major transformations to position Canada for growth over the next generation".

He promised to make it easier for firms to get approval for major energy and mining projects, to limit the growth in spending on pensions for government employees, and make investment in research and development projects more effective.

The Conservatives say they will cut spending to ensure the budget returns to a surplus by the 2015-16 fiscal year.

Their original deficit-reduction plan contemplated cutting $11 billion in government spending over four years but lawmakers and officials say the likely reductions will amount to C$24 billion over the same period.

Political opponents say the Conservatives want to cut the size of government for ideological reasons and are using the deficit as cover.

(Reporting by David Ljunggren in Ottawa; editing by Rob Wilson)

<p>Prime Minister Stephen Harper takes part in a meeting in his Langevin Block office in Ottawa January 18, 2012. REUTERS/Chris Wattie</p>