Overview
- In a Diet policy speech, Prime Minister Sanae Takaichi vowed to break with fiscal austerity through multi-year budgets and long-term funds targeting areas such as AI, semiconductors and shipbuilding, while promising measurable fiscal guardrails to maintain market confidence.
- The government will seek a two-year suspension of the 8% consumption tax on food, aiming for an interim conclusion before summer via a cross-party council and avoiding new deficit-covering bond issuance.
- Takaichi pledged to revise three core security documents this year, loosen restrictions on arms exports, accelerate a buildup toward defense outlays of around 2% of GDP, and establish a prime minister–led national intelligence body to counter foreign interference.
- Economic-security measures include proposing a CFIUS-style screening regime for sensitive investments, reviewing foreign land purchases, and rebuilding supply chains to reduce dependence on single-country sources, including for rare earths.
- Ruling with a two-thirds lower-house majority and an unchanged Cabinet, Takaichi is centralizing decision-making in the Prime Minister’s Office, yet she must navigate market scrutiny and an upper-house minority even as a new Yomiuri poll pegs approval at 73%.