July 14, 2015 / 7:29 PM / 2 years ago

Conservatives may face unexpected hazard as economy cools

OTTAWA (Reuters) - The economy has always worked for Canadian Prime Minister Stephen Harper. Elected to Canada’s top office three times with a platform of fiscal prudence, he has ridden a wave of increased support each election helped by the country’s relative economic stability.

Canada's Prime Minister Stephen Harper speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, Canada, June 17, 2015. REUTERS/Chris Wattie

But luck may be running out as he seeks a fourth term for his Conservative government just as Canada teeters on the brink of a recession.

“There has been a downturn and the reason for that has been the downturn in the global economy. It’s really that simple,” Harper, 56, said last week as his one-time strength began to look increasingly like a weakness.

It was the first time Harper, who trained as an economist, acknowledged that the economy was faltering.

The Conservatives currently trail the left-leaning New Democratic Party (NDP) in polls ahead of an October election.

Canada’s economic woes, including a struggling manufacturing sector, tepid jobs and wage growth and weak oil prices, have been compounded by slowing growth in key trading partners like the United States and China.

After reveling in Canada’s escape from the global financial crisis, Harper suddenly has less to boast about. But the party is not likely to back away from campaigning on the economy nonetheless.

“It’s a massive risk but what else is he going to run on?” said pollster Nik Nanos. “The Conservatives have built their successful franchise on Stephen Harper and the economy. If they’re not strong on both of those elements, then it’s going to be a very difficult election for them.”

Trying to convince voters that the economy he has long trumpeted as a product of good government is now a blameless victim of global malaise may be an uphill battle for Harper.

“Some people think that politicians ultimately determine the outcome of the economy and the unemployment rate ... (and) would view the recession as a direct reflection of poor fiscal management,” said David Madani, economist at Capital Economics.

“From a political point of view, clearly it’s going to be a potential weakness ... which is a bit unfair,” said Madani.

HARPER‘S ECONOMIC BRAND

While polls show national security remains a strength for Harper, a senior Conservative said the economy is the topic brought up by voters most frequently during door-to-door campaigning. A spokesman for the Prime Minister’s office did not immediately comment.

Clearly, the economy is a weakness that the opposition NDP and Liberals - both to the political left of Harper’s Conservatives - hope to take advantage of in their attempts to win the election.

“When someone says: ‘Are you better off today than four years ago when this government got its majority mandate?’ There are not many people that are going to answer that question as a yes,” said Jim Stanford, economist at Unifor, Canada’s largest private sector union.

“Whatever sector of the economy you’re in, there’s a pretty pervasive sense of insecurity.”

Pollster Nanos said research shows the Conservatives are seen to be good at controlling spending, but they do not have as strong of a lead on promoting economic growth, which may be closer to voter hearts than fiscal restraint.

And while Harper is among few Western leaders who can boast of a balanced budget forecast for 2015-2016 after years of deficit, union economist Stanford said balanced books may not pay off at the polls.

“If they had balanced the budget and things were looking up for the average household, then maybe this claim would have a bit more credibility but I think it’s a pretty hollow victory.”

Voters, especially in Harper’s Western Canadian base in resource-rich Alberta, know the prime minister is not to blame for low oil prices, said ATB Financial chief economist Todd Hirsch in Calgary.

Whether they are willing to trust the economy to the NDP is the bigger question. Alberta voters stunned the nation in May when they elected an NDP government after 44 years of Conservative rule.

“I don’t think people in Alberta will hold Mr. Harper to account for the falling oil prices or the economic slump here,” Hirsch said. “But the same way they looked at alternatives in the provincial election, they could also look at alternatives in this election.”

Additional reporting from David Ljunggren; Editing by Andrea Hopkins and Diane Craft

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