Canadians could follow the United States in a plunge over the so-called fiscal cliff in January, Bank of Canada Governor Mark Carney warns.
Extending U.S. tax cuts and spending beyond the end of this year is the “most imminent threat” facing Canada’s economy, the head of the central bank said.
There’s concern by economists that without political cooperation in the U.S. on a new budget arrangement about $600 billion in tax cuts and spending will end abruptly.
This could rob the U.S. economy of about four percentage points in growth and push the country into a recession that the Canadian economy would be sure to follow, said Finance Minister Jim Flaherty.
Carney and Flaherty have pledged to take action to support the Canadian economy if a shock from the U.S. or Europe again threatens to plunge the country into a recession.
How U.S. policy-makers deal with the threat highlighted concerns among the world’s economic leaders attending the G20 meeting last weekend in Mexico, Flaherty said.
There have been more sanitation problems at XL Foods beef-processing plant in Alberta linked to E. coli contaminated products.
The Canadian Food Inspection Agency said after the 2,000-worker plant in Brooks was allowed to resume production on Oct. 29 it ordered managers to correct problems of cleanliness and sanitation.
The company was closed on Sept. 27 due to contaminated meat that led to a massive recall and has been linked with illnesses in 17 people.
With the corrections completed, beef again is being shipped to retailers under the watchful supervision by inspectors.
Management of the plant has been taken over by JBS USA, an American subsidiary of a Brazilian company.
News in brief
• The Competition Bureau of Canada is investigating corruption in Quebec’s construction industry that has resulted in the resignations of two mayors. A commission inquiry is underway into alleged bid-rigging and kickbacks involving construction companies, government workers and political party fundraisers. This led to Gerald Tremblay resigning as Montreal’s mayor followed by Gilles Vaillancourt who was mayor for 23 years in Laval.
• Leon’s Furniture has offered $700 million in a takeover of its rival, the Brick. The offer is subject to approval by Brick shareholders and will need court and regulatory approval. Leon’s, based in Toronto with 76 stores, plans to have the two chains continue to operate as separate entities. The Brick, headquartered in Edmonton, has 230 stores including the United Furniture Warehouse outlets.
Facts and figures
Canada’s dollar is hovering around parity with the U.S. currency at 99.93 U.S. cents. The greenback is worth $1.0006 in Canadian funds before bank exchange fees.
The Bank of Canada’s key interest rate remains at 1 percent while the prime-lending rate is 3 percent.
Stock markets are lower, with the Toronto exchange index at 11,811 points and the TSX Venture index at 1,222 points.
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• David Merner of Victoria, former president of the British Columbia branch of the federal Liberals, plans to run for the party’s top job. Also wanting to succeed interim leader Bob Rae are David Bertschi, Alex Burton, Deborah Coyne, Jonathan Mousley and Justin Trudeau. The winner will be decided by a party vote on April 14.
• A third person has died after an explosion and fire at the Neptune Technologies and Bioressources plant in Sherbrooke, Quebec. Marc Couture died of burns while the bodies of two other workers were found in the ruins. Three others among 18 injured remain in the hospital and the cause of the explosion remains unknown.
• Manitoba and Alberta have had an early blast of winter as storms dumped snow and brought high winds to the provinces. About 10 inches of snow fell on Winnipeg and about 14 inches in Dauphin and Portage la Prairie last weekend, the result of a “Colorado low.” Earlier, Southern Alberta including Calgary and Edmonton received up to 14 inches of snow, a record for this time of year.