A reduction of the sales tax on food has made slow progress as Prime Minister Sanae Takaichi opted for multiparty talks that failed to reach a consensus. | BLOOMBERG
Jul 28, 2026
Prime Minister Sanae Takaichi’s long-term vision for powering Japan’s growth through domestic investment risks becoming a hollow ambition if she fails to address shorter-term angst over the cost of living.
Takaichi has rolled out an unprecedented plan to generate ¥370 trillion ($2.3 trillion) of domestic investment over the next 14 years during the first parliamentary session since her landslide election victory. That blueprint, which aims to deliver 3% nominal annual growth, underscores her intentions to use her supermajority in the Lower House of parliament to build a transformative legacy for the nation.
But there’s less clarity on how much the government will need to contribute to support this vision and where that money will come from. The same goes for a likely sales tax cut and increased defense spending. Those questions are feeding into market concerns about the finances of the nation.
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