SASKATOON - Federal Finance Minister Jim Flaherty says Canadians must brace for a looming deficit, but says the provinces and Ottawa are determined to work together to weather the tough economic times.

Speaking after a meeting with his provincial and territorial counterparts Wednesday, Flaherty said it's clear a shortfall can't be avoided given the gloomy economic forecasts.

He said the measures the government outlined in the fall economic forecast won't be enough to keep the country in the black. The faltering global economy and U.S. recession are too strong for Canada to withstand, he added.

"The U.S. recession continues unabated and the U.S. housing market has not hit bottom yet, and the predictions in respect to Canadian growth reflect that factor," he said.

"The big challenge for all the governments really is 2009 and going into 2010... 2009 is going to be a difficult year for Canada and Canadians."

But Flaherty said everyone left the meeting united.

"I think as finance ministers we recognize together that we are sharing this burden, that this is going to be a difficult time, that we are all going to act, and that we will get through it together."

The ministers meeting came the same day Bank of Canada governor Mark Carney said the country is in a recession that will persist well into next year and it will emerge from the gloom toward the end of 2009 and pick up economic strength in 2010.

As well, Bank of Nova Scotia economists predicted Wednesday that the global economy won't recover until 2010, and then the revival will be "gradual and in some cases disappointing.

Meanwhile, Canada's main stock markets took a sick day Wednesday, losing an entire session of trading after being paralyzed by data transmission problems.

Flaherty also released an updated private-sector forecast for mid-December, showing a significant decline of 0.4 per cent in the country's gross national product next year.

"The economic picture continues to worsen," he said.

Flaherty said no dollar figure was reached among the ministers for stimulating the economy for next month's federal budget.

But he was encouraged that provincial finance ministers said they will pitch in to get needed infrastructure projects breaking ground quickly.

A promised a $3.4-billion rescue package for Ontario's auto industry also led to talk of help for forestry, fisheries and livestock sectors, said Flaherty.

He expects even more sectors will want to be added to the list next year.

Earlier this week, Ontario issued a report warning that more than 580,000 jobs could be lost within five years if the big Detroit Three automakers collapse.

Other provinces have rallied with support for Ontario, which makes up 40 per cent of the Canadian economy.

"People have sympathy for what Ontario needs," said Michael Baker, Nova Scotia's finance minister.

"We recognize that having a healthy Ontario, quite frankly, means a healthier Canada."

Ontario Finance Minister Dwight Duncan said he has been very frustrated with the federal government for responding slowly to an urgent matter.

"As recently as four, five weeks ago, the federal government was saying there's no need for stimulus. That was wrong. We knew it. People losing their jobs in Ontario knew it. We're glad finally there's an acknowledgment."

Duncan said the tough job of determining what constitutes good stimulus and what infrastructure projects are most important lies ahead.

Yukon Premier Dennis Fentie, who also acts as the territory's finance minister, said the chosen infrastructure projects need to create a short-term boost as well as economic growth into the future.

He said the north needs help developing highways and hydro energy.

Manitoba Finance Minister Greg Selinger said the imminent deficit makes a stimulus package even more important.

"The reality is that unless we start lifting the economy, the recession could get worse, which generates more deficit. So the reality is unless the economy starts picking up, it makes it difficult for all governments.

Other principles the ministers agreed upon include consideration of removing boundary barriers to labour mobility, the need to make credit available to businesses and aid for employment insurance benefits.

Flaherty said some Canadians will be losing their jobs next year and they are going to need job training and skills to move into industries where growth is expected.

Baker said boosting employment insurance benefits and loosening qualification requirements was also discussed.

"This would provide, I think, some reassurance to Canadians that their situation, personally, is protected and that their families will be able to survive whatever might happen," he said.

Quebec's Monique Jerome-Forget said job training is essential.

"By 2010, when we've passed 2009, we want to be ready to be very much at the forefront of the economic situation."