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These are stories Report on Business is following Friday, March 30, 2012. Get the top business stories through the day on BlackBerry or iPhone by our mobile-friendly webpage.

Flaherty's budget Economists generally applaud Finance Minister Jim Flaherty's budget as one that sets the right path for deficit reduction without going overboard, though some observers slam it for resetting Canada's retirement age to 67.

Indeed, BMO Nesbitt Burns refers to it as "austerity lite."

"Aside from the well-advertised changes to Old Age Security (OAS) and the decision to eliminate the penny, it is far from a watershed document," said BMO economists Douglas Porter and Robert Kavcic.

"Additional restraint measures are relatively moderate ('modest' in the Finance Minister's words), and they are partially offset by new steps to support employment and business investment," they said in a report.

"Indeed, the budget goes out of its way to soft-pedal its restraining aspects. The revised fiscal outlook provides strong justification why a go-slow approach is entirely appropriate - the underlying deficit trajectory is running $6-billion per year better than expected, simply because the economy is operating about as expected (i.e heavy layers of prudence have not been required after all)."

Here are the views of some economists:

  • "When combined, the various measures included in today’s budget are aimed at improving productivity and boosting private sector growth, at a time when public spending is being constrained. In addition to being fiscally prudent in the medium-term, the government is taking action to pursue fiscally sound policies for the long run. The increase in the qualifying age for Old Age Security, the new normal age for retirement among public sector workers and reforms to public pensions are good examples of this." Craig Alexander and Sonya Gulati, Toronto-Dominion Bank
  • "The federal fiscal repair effort is substantial - unwinding the stimulus program, conducting two strategic spending reviews, curtailing Defence expenditures and each year closing tax loopholes. Yet, with the advantage of a diversified economy, and a major boost from substantial resource and infrastructure projects, Canada’s economic growth is still likely to continue at a moderate, though not robust, pace. The result, even within two years, will be increased federal fiscal flexibility to take on new challenges or weather unexpected adverse events." Mary Webb and Nathan Joshua, Bank of Nova Scotia
  • "While continuing on the path towards fiscal balance, the 2012 budget was as much about Canada’s longer term prospects as it was about squeezing spending ... For bond market investors, Canada’s federal government remains the very picture of health, standing head and shoulders above many developed countries in terms of fi scal sustainability. And given demand for what has become increasingly rare triple-A-rated sovereign paper, the government’s bond program should continue to be very easily digested." Avery Shenfeld, Warren Lovely, Peter Buchanan and Emanuella Enenajor, CIBC World Markets
  • Canada’s fiscal position prior to the 2007 crisis meant the federal government was in a position to bring significant measures in order to foster economic growth and Canada’s competitiveness on international markets. We have argued in the past ... that retention of older workers in the work force should be seen as an economic growth strategy to limit the pressure of aging on all government social programs (notably health care), not just public pensions. Today’s budget announcement to change OAS/GIS age eligibility from 65 to 67 starting in 2023 will have a limited impact on the bulk of baby boomers. While it is a step in the right direction, it could have been implemented earlier." Paul-André Pinsonnault and Marc Pinsonneault, National Bank of Canada
  • The federal government has delivered on its promise of guiding the Canadian economy towards improved fiscal performance in what are generally difficult economic times globally. There is often the tendency to project improvingfiscal conditions on vague initiatives for cost savings. To the federal government’s credit, it has gone to great lengths to identify specific areas of saving which provides greater reassurance of the improving fiscal situation being realized. These improving fiscal measures are in marked contrast to less stellar fiscal performance among numerous other industrialized economies." Craig Wright, Paul Ferley, Royal Bank of Canada

Mr. Flaherty's budget speeds up deficit reduction through fast cuts, pushes up the trigger for the more than $6,000-a-year OAS from 65 on a phased-in approach beginning in 2023, extends a hiring credit for small business, and caps potential increases in Canada's Employment Insurance scheme.

Given his approach, it's easy to see why Canada's fiscal policy is held in such regard around the world, when many countries are struggling under massive debts and in need of bailouts. Of course, the move on retirement has been largely put on the shoulders of our children.

"Today's budget tabled by Finance Minister Flaherty confirmed the worst for our children and grandchildren," said the National Pensioner and Senior Citizens Federation.

"This government has attacked the retirement security of future generations as it looks years ahead for dollars to finance other priorities," it added. "There was nothing for seniors, not even a discarded penny for the poorest living in poverty."

Lucky for Nickelback ... I could have used my time for something far more useful, but decided instead to research what will have to change in the wake of the Canadian government's decision yesterday to kill the penny. Sort of like 20th Century Fox entering the 21st Century.

They don't have the same ring, but still:

The nickel dropped A dime saved is a dime earned A nickel for your thoughts (Which is just about right given inflation) Quarterwise and pound foolish That'll cost a pretty toonie He's a bad loonie (Actually, that one kind of works) I don't have two quarters to rub together In for a loonie, in for a pound My two dimes worth Toonie ante He keeps turning up like a bad nickel Leon's Don't Pay A Nickel Event (James Bond's Miss Moneypenny never much sense anyway)

RIM in the crosshairs I'd prefer to see RIM as Canadian and proud, but it's not hard to understand why CEO Thorsten Heins has put everying, including a potential sale, on the table.

Shares of Research In Motion Ltd. regained ground lost in yesterday's after-hours action in the wake of a weak fourth-quarter report, though analysts take a dim view of the stock.

RIM lost $125-million or 24 cents a share, diluted, in the quarter, compared to a profit of $934-million or $1.78 a year earlier. Revenue came in at $4.2-billion, well below the $4.6-billion that had been projected.

As The Globe and Mail's Iain Marlow reports, Mr. Heins also charted a new course for the BlackBerry maker, launching a "comprehensive review of strategic opportunities" that could include partnerships, licensing and joint ventures. While he doesn't want to go this way, he said he would explore a sale "if there's any element that we detect during that strategic review that would lead us into this direction."

The names tossed about include those that have been mentioned before amid the company's downward path: Microsoft Corp. , Nokia Corp. and Apple Inc. , among others, though I'd question how the latter could get that past the competition cops.

Analysts noted the many challenges facing the Canadian smartphone maker, though they gave a nod to Mr. Heins' honesty.

"We felt tonight's earnings call was the first honest acknowledgement from management of the seriousness of the competitive headwinds facing RIM, with a firmer commitment to scale back and refocus resources; drive operational/process efficiencies, striving for $1-billion in savings; and preserving its service revenue," said Phillip Huang and Amitabh Passi of UBS Securities.

"It's an uphill battle and we await a first glimpse of BB10 devices in May."

RIM also plans to no longer project its outlook, which comes as little surprise given that it said it "expects continued pressure on revenue and earnings throughout fiscal 2013."

Economic growth slows Economic growth slowed in Canada in January, kicking off the year on a modest note.

Gross domestic product expanded by 0.1 per cent, Statistics Canada said today, a slower pace than December's 0.5 per cent as gains in manufacturing offset a dip in the natural industry.

It's interesting to note that the factory sector expanded for the fifth month in a row.

While production in crude rose, natural gas slipped.

And here's a sign: Home construction declined, as did business for real estate agents and brokers.

"The modest January gain follows a strong handoff in December, and leaves growth on pace to clock in around 2.1 per cent in Q1, slightly ahead of the Bank of Canada's latest 1.8-per-cent forecast," said Robert Kavcic of BMO Nesbitt Burns.

"But, the bank did note in its latest statement that 'although the economy will likely grow faster than forecast in the first quarter due to temporary factors, underlying economic momentum remains around trend.' Still-rising auto production and sales should lend further support in the months ahead, but fiscal restraint, especially in provinces like Ontario and Quebec, should temper activity somewhat. Growth for all of 2012 also remains on pace to hit the 2-per-cent mark."

Euro leaders boost bailout fund Finance ministers from the embattled euro zone agreed to day to boost the size of their bailout fund to more than €700-billion, and kick in a bit more, in another bid to ease the debt crisis and head off its spread.

The actual size of the fund will be €800-billion, though that includes loans already made, and will shrink when the new measures come into effect.

But, as some observers noted today, the 17-member monetary union still has a long way to go.

"If EU leaders think that their plan to boost the bailout fund, by using monetary gymnastics, to a total €740-billion, will somehow persuade markets that they are starting to get on top of the current crisis, then they could well be in for a rude awakening," said senior market analyst Michael Hewson of CMC Markets.

"Once again the politics is getting in the way of a quick solution and bond markets are reflecting that truth with Spanish 10-year yields once again pushing up towards 5.5 per cent, as unrest in the country grows just as the new government tries to push through a new austerity budget that by the government's own admission will be very harsh."

Spain today released a budget it hopes will slash its deficit by €27-billion.

Stocks mixed Investors were in a sour mood in Asia, but aside from that global markets appear headed to close out a strong first quarter in fine fashion.

"A late rally in U.S. equity indices has seen Europe open stronger and move higher," said Sebastien Galy, senior currency strategist at Société Générale. "Credit spreads are tighter, the dollar is weaker across the board and bond yields are slightly higher. Fed and ECB monetary policy is still trumping all other concerns."

Tokyo's Nikkei and Hong Kong's Hang Seng each lost 0.3 per cent, but stocks in Europe gain and New York appeared headed toward a stronger open.

London's FTSE 100, Germany's DAX and the Paris CAC 40 were up by between 0.6 per cent and 1.2 per cent by about 9 a.m. ET. Dow Jones industrial average and S&P 500 futures also climbed.

"Investors can look back on the past three months with a degree of satisfaction, after the impressive run higher for markets," said market analyst Chris Beauchamp at IG Index.

"However, the future looks less assured. As at the beginning of the year, the euro zone crisis is still with us, although the focus is now more on Spain and Italy than Greece, and now we have increasing concerns about the health of China to contend with," he said.

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