Prime Minister Sanae Takaichi pledges to ease fiscal restraint while tying spending to tax revenue growth amid low inflation and wage gains.
Japan’s Prime Minister Sanae Takaichi announced plans to move away from years of tight fiscal policy, citing the need to boost domestic investment and sustain economic momentum. Inflation stands at 1.7%, the lowest among G7 nations, with improving wage trends supporting growth prospects.
Takaichi ruled out reckless spending, emphasizing that higher government expenditure would be funded by tax revenue tied to GDP expansion. She also indicated a potential reduction in the 8% sales tax on food, pending lawmaker agreement, while stressing the importance of clear fiscal targets.
The remarks follow signs of Japan’s economy gaining traction, though Takaichi noted deflation has not been fully exited. The shift aims to prevent lost growth opportunities by prioritizing future investment over prolonged austerity.