The Zhitong Finance App notes that Japan's largest opposition party has actually split. At a time when Prime Minister Takaichi Sanae has been in office for almost a year and his position continues to be consolidated, there will no longer be a unified force in the House of Representatives to check and balance it.
The collapse of the Centrist Reform Alliance (CRA) occurred just a few months after its patchwork was formed, when the coalition aimed to challenge the conservative Liberal Democratic Party (LDP) led by Sanae Takaichi in the House of Representatives election. This “bizarre coalition” of former Liberal Democratic Party ruling partners and opposition groups with Buddhist backgrounds failed to attract voters, and Takaichi Sanae eventually won a historic absolute majority of seats.
CRA leader, Jun Ogawa, also stressed at a press conference in Tokyo on Wednesday that they will continue to advance their “centrist” agenda; at the same time, he said that after the dissolution of the coalition, CRA members will either join the new political party under construction or return to the Komeito Party, the former ruling partner of the Liberal Democratic Party.
This split means that the Liberal Democratic Party's current ruling partner, the Japan Restoration Association, will become the second-largest party in the House of Representatives with 36 seats. Meanwhile, the Liberal Democratic Party, which has been in power for the past 70 years except for a few years, currently has 316 seats.
However, Sanae Takaichi still has less than half of the Senate seats in the ruling coalition, which means she still needs to work with smaller opposition groups to successfully pass the bill. The House of Representatives is the more powerful house that has the power to reverse the Senate vote results, but these powers are used relatively rarely.
The CRA had previously engaged in months-long discussions to formalize the merger between its constituent parties and extend it to the Senate. After it was difficult for the parties to put aside their differences and agree on policies and strategies, Junya Ogawa's statement announced the end of these negotiations.
The division of the largest opposition party objectively eliminated strong resistance to unification at the National Assembly level, and significantly enhanced the political smoothness of the Takaichi Sanae government in implementing expansionary fiscal policies; however, the core constraints that determine the final strength of the policy have shifted from “political opposition” to “financial market restraint.”
Despite the weakening of political opposition, if Sanae Takaichi wants to launch a “larger scale” stimulus policy without hesitation, he still faces severe economic and market constraints.
Under pressure from the bond market to sell off and the shadow of an inflationary crisis, the future fiscal stimulus of the Takaichi government will no longer depend on “opposition parties not letting go”, but on “the market can bear it.”
The scale of Japan's budget application for the current fiscal year has expanded to a level similar to that during the pandemic. As Prime Minister Takaichi Sanae pursues an expansionary fiscal agenda, the Japanese government's borrowing costs have risen to a 30-year high.
Japan's Ministry of Finance said on Friday that after the government adopted the preparation method of incorporating the initial budget and supplementary budget into a unified framework, the total amount of budget applications submitted by various government departments reached 143.1 trillion yen (about 917.78 billion US dollars).