Japanese PM Takaichi’s party poised for landslide victory, poll shows

TOKYO - Japanese Prime Minister Sanae Takaichi’s party is likely to score a landslide victory in next week’s Lower House election, a survey by the Asahi newspaper showed, heightening the chance the country will continue to pursue big spending and tax cuts.

A strong showing in the

Feb 8

election

would solidify Ms Takaichi’s grip on her party and give her a mandate for her expansionary fiscal policy, which could heighten concerns about Japan’s finances and push bond yields higher.

Ms Takaichi’s Liberal Democratic Party (LDP) is likely to well exceed a majority of 233 seats out of 465 seats up for grabs in the Lower House, according to Asahi’s poll released on Feb 1. That would be an increase from 198 seats now.

Together with LDP’s coalition partner, the Japan Innovation Party or Ishin, the ruling alliance will likely reach 300 seats, the poll showed.

“A huge LDP win would further strengthen Takaichi’s grip on power. It won’t be surprising for markets to see a higher chance of Takaichi pursuing her flagship proactive fiscal policies including a consumption tax cut,” said Mr Keisuke Tsuruta, senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities.

Japanese government bond yields rose on Feb 2 as investors priced in the chance that Ms Takaichi will secure an electoral mandate to push through her “proactive” fiscal policy focused on bigger spending and tax cuts.

The largest opposition party, the Centrist Reform Alliance, is struggling and could lose half its 167 seats, the Asahi said.

Ms Takaichi’s ruling coalition holds a slim majority in the powerful Lower House but has a minority in the Upper House.

The Premier dissolved Parliament in January and called a snap election on Feb 8, seeking a mandate for her push to reflate the economy with expansionary fiscal policy.

Japan suffered a broad market rout in January after Ms Takaichi pledged to suspend an 8 per cent levy on food sales for two years, reviving investor concerns about fiscal discipline in a country with public debt more than twice the size of its economy.

Most other parties have also called for a suspension of or a cut to the consumption tax to cushion the blow to households from rising living costs. REUTERS