Comprehensive Economic Measures: Strengthen The Nation by Realizing Growth

Editorial

15:00 JST, October 28, 2025

The Nikkei Stock Average has topped 50,000 for the first time, driven by expectations for the economic policies of Prime Minister Sanae Takaichi. The government must, with a sense of urgency, advance economic measures to strengthen the nation and improve growth.

Takaichi advocates “responsible and expansionary fiscal policy,” and aims to achieve a strong economy through public-private collaboration in investment. The comprehensive economic measures that are to be formulated around combating high prices will serve as a litmus test for her policy.

The first step in realizing the measures will be to put together the supplementary budget proposal for this fiscal year.

Typically, projects not included in the regular annual budget have been added indiscriminately to supplementary budget proposals, often leading to bloated plans.

The Japanese economy has lost its presence on the international stage and now must turn to a counteroffensive. There is no room for Japan to merely pursue large scale budgets by inertia. Projects that contribute to national strength should be selected and included in the budget.

The prime minister intends to promote “crisis management investments” to strengthen supply chains in strategic fields directly linked to national strength, such as artificial intelligence, semiconductors and aerospace. She needs to identify promising projects in dialogue with the private sector.

From an economic security perspective, especially considering China, it is crucial for Japan and the United States to rebuild supply chains for such areas as semiconductors. And it is vital that the $550 billion (about ¥84 trillion) promised under the tariff agreement be swiftly invested in the United States.

To achieve growth, it is also essential to keep in mind the need for national security.

The government aims to raise security expenditures to 2% of GDP by fiscal 2027. Takaichi plans to add related expenses to the supplementary budget proposal and achieve the target in fiscal 2025, given the importance of the Japan-U.S. alliance.

The government had decided to raise income taxes to cover the increase in defense spending, but such tax hikes have been put off. Securing stable fiscal resources remains a serious issue.

Measures against high prices — the focus of the comprehensive measures — must target the necessary groups, avoiding indiscriminate handouts. The cash payments pledged by the Liberal Democratic Party in the House of Councillors election will not be included in the package. The prime minister probably decided that such a measure would be ineffective.

Fiscal discipline is also essential. If the government carelessly issues more bonds and confidence in fiscal conditions are shaken, it could further weaken the yen and undermine national strength.

The ruling and opposition parties have already agreed to scrap the provisional gasoline tax. Ending the provisional diesel tax is also under consideration. Combined, this would reduce national and local tax revenues by ¥1.5 trillion.

As a potential revenue source, there is a plan being considered that would revise special tax measures that currently lower corporate taxes under certain conditions. Discussions on this matter should be drawn to a conclusion.

(From The Yomiuri Shimbun, Oct. 28, 2025)