Political Economy News

Since the Kan administration took office in September, there has been a lot of attention paid to the measures taken to combat the coronavirus, which continues to spread, as well as statements on breaking down the stove-piped administration through public-private digitalization and efforts to decarbonize the economy by 2050.

Additional economic stimulus measures were decided at the extraordinary Diet session on December 8, mainly on these topics. The scale of the project is 73.6 trillion yen. Let's take a closer look at the details.

Kan have invested 51.7 trillion yen, or about 70% of the total, in growth strategies such as decarbonization and digitalization. This shows that the government is very conscious of the fact that the coronavirus infection is coming to an end and is trying to promote change.

At a meeting of the Council on Economic Advisors on August 8, Prime Minister Kan said, "We have included measures for new growth, such as green and digital measures, and we expect the direct economic impact to be about 3.6% of GDP.

Decarbonization and digitalization have been the signature policies of the Kan administration, and it is clear that they are going to put a lot of effort into them.

Let's take a look at the outline of the measures.

 It is a trend in major countries to focus on the environment and digital technology to raise the growth rate after Corona.

Mr. Biden, who is sure to win the U.S. presidential election, has also announced a policy of investing $2 trillion in clean energy infrastructure and technology over four years.

In the U.K., he has announced that he will invest 12 billion pounds to create 250,000 jobs in renewable energy and other fields by the year 30, and in France, he has announced that he will invest in the development of digital and other next-generation technologies.

Following the first and second rounds of supplementary spending, which totaled more than 230 trillion yen, these large-scale measures have ensured that new government bond issuance in fiscal 2008 will exceed 100 trillion yen for the first time. However, most observers believe that long-term interest rates will remain flat because the Bank of Japan will increase its purchases even if the issuance is increased.

At the extraordinary Diet session this year, the basic policy for the budget for fiscal year 2021 was also decided, and as with the additional measures, it is said to be to prevent the spread of infectious diseases and to strengthen growth by realizing digitalization and a green society.

However, with regard to fiscal soundness, the policy does not mention the goal of achieving a primary balance surplus by fiscal 2013, which has been included in previous years, but instead states that "the economy is the key to fiscal soundness.