TORONTO (Reuters) - The Canadian 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," Finance Minister Jim Flaherty said in a speech in Toronto.
But he added a cautionary note that any new stimulus measures 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".
Canadian banks are so far not endangered, he said. "We're comfortable with their exposure being relatively minor with respect to the crisis in Europe."
Canada's cautious banks did not need government bailouts during the 2008-09 recession and the government's budget deficit is far narrower, at about 1.8 percent of gross domestic product, than is the case in many other countries.
Canada eyes stimulus as Europe crisis spreads | Top News | Reuters