The global economy is at risk of falling into a second recession if European leaders don't resolve the debt crisis soon, Canadian finance minister James Flaherty said in a speech Wednesday.
"The European crisis is the world's most immediate and pressing problem. It threatens the strong, sustainable and balanced growth that the G-20 countries have made their priority," Flaherty said at a Canada-U.S. Securities Markets Summit in New York.
He said that it is ultimately up to European leaders to come up with a fix, but he urged them to expand the bailout fund soon and make a final decision on how they will help Greece and whether the debt-ridden country needs to restructure its debt. A restructuring of Greece's debt could help the eurozone "move on," he said.
"If this crisis is left unaddressed it will eventually become too big for Europe to solve," Flaherty warned.
He blamed the spreading debt crisis on the slow response from European leaders. "This crisis could have been averted a year ago. This crisis could have been averted before it threatened global growth," Flaherty said.
Flaherty said that any plan must be clear and divisive. "If the markets understand that Europe has a clear and comprehensive plan....the markets will support Europe on its path to recovery."
As for Canada, he said that the country is recovering "faster than most" countries from the recession. He cited the country's stable financial sector and the fact that not a single bank failed during the recession. Flaherty added that unlike the U.S., Canada has a strong housing market thanks to "prudent lending practices."