Japanese Prime Minister Shinzo Abe has just won an increase in his majority that will allow him to rule for a new four-year term and offered him a substantial mandate for change. He fought the election on seeking economic reform and trying to end the developed world’s longest economic failure. He should not waste the opportunity to use his post-election euphoria to take on people with vested interests and make the changes he wants, which he has failed to do over the past two years.
He needs to make sure that his programme of aggressive monetary easing, to weaken the yen and boost both the stock market and inflation; fiscal spending through huge budget deficits and structural change by cutting protectionist legislation will boost long-term growth. Another concern is that much of the heat in the election was generated by Abe’s plan to change Japan’s pacifist constitution to end the 70-year-old ban on collective self-defence, which would allow Japanese forces to fight alongside allies on foreign soil. This return to allowing military capability has profoundly irritated Korea and China and can only inflame tensions.
