Comprehensive Economic Measures: Are They Enough to Overcome Price Increases?

Editorial

15:17 JST, November 22, 2025

Prime Minister Sanae Takaichi’s administration has compiled its first economic measures, but regarding the content, it can hardly be called “responsible” and proactive public finances.

As the focus is on inflating expenditures, it is difficult to see how the measures will lead to overcoming rising prices and strengthening the economy.

At a Cabinet meeting, the government approved a comprehensive package of economic measures with such pillars as countering rising prices. Combined with large-scale tax cuts and other measures, the total is ¥21.3 trillion. Including private-sector spending and other factors, it amounts to ¥42.8 trillion. Expenditures from the general account total ¥17.7 trillion, exceeding the previous fiscal year’s ¥13.9 trillion.

The high tariff policy of U.S. President Donald Trump’s administration has disrupted supply chains, and China shows no sign of halting its economic coercion. There is an urgent need from an economic security perspective to strengthen production networks.

It is praiseworthy that the government is allocating ¥7.2 trillion — mainly for “strategic investments that enhance resilience against potential crises” — to facilitate investments through public-private cooperation in such fields as artificial intelligence, semiconductors and shipbuilding. It would be reasonable to take such measures as allocating ¥1.7 trillion for defense expenditures ahead of schedule.

The problem is that the comprehensive economic stimulus package includes measures that seem to be lavish handouts for budgets. The government fails to sufficiently discern the effectiveness of the measures and determine which projects should be supported. The supplementary budgets before the COVID-19 pandemic were several trillion yen. The scale of the comprehensive economic measures is too excessive, even though the country is now not in a state of economic crisis.

A symbol of this problem is “rice coupons.” They are merely a stopgap measure and might delay price declines instead.

What is needed to lower the price of rice is a revision of the de facto rice acreage reduction policy and boosting farmers’ motivation to increase production through such means as large-scale operations. Agriculture, Forestry and Fisheries Minister Norikazu Suzuki revised the government policy to boost production, but this will hardly be able to gain public understanding.

Furthermore, the decision to allocate about ¥400 billion to provide ¥20,000 in cash per child is also difficult to understand. This would leave behind low-income earners who do not have children, likely heightening feelings of unfairness among them.

The subsidy for electricity and gas bills, about which it has been noted that it would extend benefits even to the wealthy, will also be resumed. For usage from January to March next year, support of about ¥7,000 per household will be provided.

As the economy continues to gradually recover, now is the time to achieve both economic growth and fiscal reconstruction. It is unclear how this awareness is being utilized.

Market concerns over worsening fiscal conditions are intensifying. The yen has weakened to the ¥157 range per dollar, and long-term interest rates have risen to the 1.8% range for the first time in about 17½ years.

The primary cause of persistently high prices of food and other items is the excessive weakening of the yen. Amid supply constraints due to labor shortages, increasing government spending could only fuel inflation. When fundamental solutions are not provided and stopgap measures are repeated, public dissatisfaction will likely not subside.

(From The Yomiuri Shimbun, Nov. 22, 2025)