Private sector will pick up slack if US cuts: Canada FM

OTTAWA: Canada's finance minister on Friday downplayed fears over massive budget cuts looming in the United States, saying the private sector of the world's largest economy would pick up the slack.

"If the cuts happen, I am confident that the strength of the US private sector should mean that the United States should be able to handle the impacts," Finance Minister Jim Flaherty told a press conference.

The arbitrary and automatic $85 billion dollar cuts, known as the "sequester", were to begin later Friday.

Many have predicted the cuts will wound the already fragile US economy, cost a million jobs and harm military readiness.

Though upbeat on the US economy, Flaherty said it was "regrettable" that Canada's largest trading partner "continues to move from crisis to crisis."

"We hope and certainly encourage our friends in the United States through the G20 and in other ways to develop a solid, medium-term economic plan, a sustainable fiscal plan... and to stick with the plan," he said.

Flaherty said the US spending cuts would reduce US growth in 2013 by about 0.4 percent. He would not say if ripples might be felt in Canada, which earlier reported lower than expected economic growth in 2012.