VANCOUVER (Reuters) - Concerns about a so-called “fiscal cliff” in the United States are warranted but they should not overshadow the need for America to “get a grip” on its longer-term fiscal situation, Canadian Prime Minister Stephen Harper said on Thursday.
“The United States fiscal situation is very bad, the trajectory is very bad,” Harper said at a Bloomberg conference in Vancouver when asked about the fiscal woes of Canada’s biggest trading partner.
“And regardless of what happens in the next three or four months, in the next few years that trajectory still has to be resolved,” he said.
The U.S. Federal Reserve has said a looming “fiscal cliff” of spending cuts and expiring tax breaks at the end of this year could shove the country’s fragile economy into a new recession.
“I know everyone is concerned about the so-called fiscal cliff, and rightly concerned about it -- a sudden and dramatic contraction could be unhelpful,” Harper said.
“But I don’t think that should be taken out of the longer-term context, which is the United States must get a grip on its fiscal situation.”
An even bigger threat to the Canadian economy, however, was the sovereign debt crisis in Europe, Harper said.
Asked if he was frustrated by the slowness of action, he said: ”It frustrates all of us, but this is the unfortunate reality of the institutional system.
“They do feel the pressure of the markets, and they are constantly responding, and we just encourage them to expedite those conversations.”
Reporting By Nicole Mordant in Vancouver; editing by Carol Bishopric