OTTAWA—The opposition is accusing Prime Minister Stephen Harper of trying to scare Canadians by suggesting a fall election would stall the economic recovery.

Speaking to reporters in Quebec, Harper said no one, especially his government, wants an election right now.

“I know there are some signs of optimism, but the so-called recovery at this point is extremely fragile,” Harper said. “It’s based on governments continuing with co-ordinated world-wide fiscal and monetary stimulus.

“We do not need another round of political instability, another round of elections. We need Parliament to focus on the economy, that’s what the government’s doing.”

But Liberal finance critic John McCallum says it’s nonsense to suggest stimulus money would halt if Harper’s government fell in an autumn parliamentary vote over employment insurance reform.

“He’s almost saying the sky is going to fall if we don’t have a Conservative government,” said McCallum. “This is the same Stephen Harper who suggested at the last election that if Canadians voted for him they would avoid a recession.”

The Tories are holding a number of summer meetings with the Liberals to craft a compromise agreement that will reform the EI system. The Liberals have hinted they will bring the government down in a non-confidence vote in the fall if an agreement cannot be reached.

NDP leader Jack Layton says the government’s “inability” to get stimulus spending “out the door”, and not an election, is what will really hurt the recovery.

“Instead of lobbying electoral on-and-off-again grenades at each other, these two parties should be telling their teams to sit down and fix the EI system like they promised,” Layton said.

Harper said if talks with the Liberals failed, his party would draft its own EI reform proposals and seek support in Parliament where he would hope to prolong his government’s life with support from the Bloc Quebecois or NDP.

Meanwhile, the Conference Board of Canada put out a report claiming the economic recovery is in sight. Broadly agreeing with the Bank of Canada, the report calls for modest growth in the second half of 2009 with the economy expanding by 2.7% next year.

The report says Manitoba, P.E.I., Nova Scotia and New Brunswick will all escape recession this year but every other province will end 2009 with negative growth.

Next year all provinces will grow except Newfoundland and Labrador where low oil prices are expected to keep that economy almost stagnant, the report said.

peter.zimonjic@sunmedia.ca