With gas prices on the rise and an economic slowdown forecasted, the Conservative government is facing new, tough questions from a nervous public.

On CTV's Question Period, Federal Finance Minister Jim Flaherty tried to reassure the public that the government is well-positioned for the economic downturn, saying that the budget won't sink into a deficit.

"We've been very clear in our planning, not only for this fiscal year but for the next fiscal year, that we'll maintain a balanced budget," he said.

"We knew an economic slowdown was coming and we created an economic stimulus so that we're well positioned to weather the storm."

But a poll released Sunday suggested that many Canadians were not as optimistic as Flaherty.

Fifty-six per cent of respondents to The Canadian Press-Harris-Decima survey said they were worried about a recession, and 55 per cent said they didn't feel Prime Minister Stephen Harper offered much optimism or inspiration.

Also on Question Period, Liberal leader Stephane Dion accused the Tories of squandering what he said were huge budget surpluses left by the former Liberal government.

"The way that Harper and Mr. Flaherty are handling the economy is not helpful at all for what we need to do," Dion said.

"They did not have fiscal discipline enough to have a contingency reserve ... We gave them the strongest fiscal framework of all the G-8 countries. It took two years for them to destroy it and now we are very close to a deficit."

Dion also said there is something government can do about rising gas prices such as implementing a carbon tax.

However, despite the Conservatives recent troubles with the economy, Foreign Affairs Minister Maxime Bernier's political gaffe in Afghanistan and the Elections Canada investigation, the Liberals do not seem to be pushing for an election.

The numbers

In his February budget, Flaherty predicted a $2.3-billion budget surplus for 2008. But that projection was based on a 1.7 per cent economic growth rate.

On Thursday, the Bank of Canada lowered its economic growth forecast to 1.4 per cent. In January, it predicted annual economic growth of 1.8 per cent.

Mark Carney, the central bank's governor, said Canada's economy will pick up in the second half of the year after a slow first half.

The report noted that Central Canada's manufacturers -- and the export sector -- will be especially hard hit as the U.S. economy takes a dip.

But Carney doesn't think the United States, which provides the market for 80 per cent of Canada's exports, will recover from its economic problems until 2010.

If the Bank of Canada's projections hold true or the situation worsens, that would leave Ottawa with less fiscal room to manoeuvre. That has some analysts speculating that if things worsen, Ottawa will either have to raise taxes or cut spending to avoid a deficit.

Flaherty did not state if he was considering either option. But he noted that "there are tools that are available, if we need them."

Flaherty didn't specifically mention what those tools would be, but he repeated the Conservative government plans to have a balanced budget.

He also touted the fiscal stimulus his government provided through tax cuts and infrastructure spending.

The Bank of Canada also cut interest rates on Tuesday to three per cent from 3.5 per cent. Carney suggested at least one more cut could come this year.