–Canadian Company Balance Sheets ‘Best in Living Memory’
–Europe Must actually Implement Reforms
By Courtney Tower
OTTAWA (MNI) – Canadian firms have their best balance sheets in
memory and will continue with solid business investment in plant and
equipment to become more productive, Bank of Canada Gov. Mark Carney
said Wednesday.
There will be some dampening of already high business investment
due to the European crisis and global financial/economic uncertainty,
but it will continue to be “solid” despite external pressures, he
told a news conference.
Carney met the media after releasing a quarterly Monetary Policy
Report, saying the outlook has deteriorated and “uncertainty has
increased” over the last four months.
The recession in Europe will be deeper and longer than previously
anticipated, starting in the fourth quarter last year and continuing for
four quarters, he said.
Despite Europe-led uncertainties, Canadian business investment will
be strong because financial conditions in Canada are very stimulative,
and because “balance sheets are the in best shape in living memory.”
Besides Canada provides a “competitive tax environment,” he said.
Carney said Canadian household debt is rising, in part because the
Bank of the Canada’s very low 1.0% key policy interest rate but also
because foreign funds are flowing into Canada as a safe haven and
reducing, thereby, the costs of borrowing.
For Europe, Carney said it is important for authorities to
actually carry out reforms already agreed upon and to undertake further
structural and financial reforms.
For the United States, he said the pace of recovery will slow
somewhat, because of the effects of the European crisis, U.S. budget
spending cuts will click in later in the year and American households
are starting to spend less because savings have risen to unsustainable
levels.
** Market News International – Ottawa **
[TOPICS: M$C$$$,MAUDS$]