By Julian Beltrame, The Canadian Press

OTTAWA - Finance Minister Jim Flaherty plans to present a new plan for balancing the federal budget later this month, just as a private-sector calculation suggests it will take Ottawa eight years to return to surplus unless taxes are raised.

The finance minister said in London on Friday that he will unveil a new plan to balance the budget when he delivers his third quarterly report on the government's stimulus spending, expected in late September.

"What I expect to be able to do in our next report to Parliament is to outline how we will move back to surplus over several years in Canada," he told a news conference as he prepared to attend a G20 meeting, adding he sees no need for additional government stimulus spending.

Flaherty has been under pressure to revise what remains of his January budget estimates to account for new economic realities from several quarters, including deficit projections from parliament's budget watchdog.

On Friday, a new report by Toronto-based Dale Orr Economic Insight made the point that the target is unattainable, unless taxes are raised. Both Flaherty and Prime Minister Stephen Harper have ruled out new taxes or drastic program cuts.

Under the status quo scenario, economist Dale Orr predicts the government will suffer eight years of deficits - twice the budget projection - adding about $160 billion to the national debt. That would push the debt to about $620 billion in the 2016-17 financial year.

While better than the $200 billion added debt burden Orr had forecast in July, the sum is still about $60 billion more than the government's last update in June.

Orr said the changes to his earlier forecast stem from a different picture of the economy than existed in July. New numbers show that the economy is pulling out of the hole faster and stronger than previously expected.

Statistics Canada reported Friday that the economy created 27,100 new jobs in August, with the added bonus that the pivotal private sector finally kicked into gear after 11 months of shedding jobs, adding 49,200 workers in that category.

Despite the recent economic growth, Orr said the new calculation leaves Flaherty with little choice but to revise his projections.

Orr did have some good news for Ottawa. He now believes the deficit for the current financial year ending next March will come in at $47.6 billion, rather than the $50.2 billion predicted by Flaherty in June.

Orr is among several prominent economists, including the TD Bank's Don Drummond and parliamentary budget officer Kevin Page. who have called on the government to update the budget numbers.

Orr offers no advice to the government on how to eliminate the deficit, but cautions that the preferred route of "growing out of deficit" favoured by Prime Minister Stephen Harper and the Liberal opposition will take twice as long as the budget predicts.

And longer still if future governments are unable to stick to plans of keeping spending increases at four per cent, something neither Liberals nor Tories managed most of the decade.

Orr said the simplest way to shorten the time it will take to balance the budget is to raise taxes, but both the Tories and Liberals have rejected that option.

"You can wait (eight years), but while you are waiting you are exposing yourselves to risks and you are building up the debt," Orr warned.

That's what happened during the 1970s and 1980s as successive Liberal and Tory governments attempted to rein in ballooning deficits, Orr said, but were sent off track by unexpected surprises.

A sudden dip in the economy, or even something like lower oil prices could set the timetable for balancing the budget back, he explained.

While a high deficit during a recession can be a good thing because it means the government is spending to help create jobs, a growing national debt can harm the economy in the long-term.

Rising interest payments to foreign bondholders or other creditors can squeeze billions of dollars out of the economy every year, money that would normally go into government social and economic programs, job-creating subsidies or for other uses.

Such costs could rise even higher if global interest rates move higher as is expected over the next few years when the global economy recovers.