OTTAWA - Prime Minister Stephen Harper says he is optimistic that 2010 will be a year of economic recovery, but he's also warning Canadians that higher interest rates are on the way.

Harper made the comments in a year-end interview with CTV News to be broadcast on Saturday.

The prime minister said his government plans more stimulus spending next year and hints it may continue the popular home renovation tax credit for another year.

Speaking about the country's $56-billion deficit, which has grown during the recession from stimulus spending, Harper said the government will start to whittle it down in 2011.

Asked about speculation he may prorogue Parliament over the Christmas break, Harper said he hasn't made any decisions yet and insisted the next federal budget will not come until March.

He also defended his government's policy on climate change saying it is trying to develop a plan that will reduce emissions without causing hundreds of thousands of people to lose their jobs in the middle of a recession.