Abe Shinzo Announces Additional Large Additional Budget

Japanese Prime Minister Abe Shinzo today formally told Japanese lawmakers that the consumption tax would be postponed until 2019.

Andouble's move was intended to support consumption, but it also aggravated the Japanese government's efforts.

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Originally, the increase in consumption tax from 8% to 10% should come into effect in April 2017, and now the effective time has been postponed for two and a half years.

Andouble had previously claimed that only the outbreak of Lehman level crisis or severe earthquake would delay the increase of consumption tax. Now this view has changed.

"Although many people want to postpone the increase of consumption tax, there are many voices against it."

Bloomberg quoted Jun Okumura, a visiting scholar at Meiji Global Affairs Institute, who said that the decision to support the decision also understood that Andouble had broken his promise.

After the announcement, USD / JPY fell below the 110 pass, the lowest to 109.99 yen.

The Nikkei 225 index expanded to 1.1%.

Japanese Prime Minister Abe Shinzo decided to seek an additional 5-10 trillion yen budget scale, and proposed a stimulus plan after the Senate election in July.

According to the plan, the new budget will be used to build maglev trains from Nagoya to Osaka, and to issue coupons to stimulate consumption, increase the salaries of child care workers and set up scholarships.

"In the context of weak demand in Asia, if you want the economy to run smoothly, you should increase additional public spending," commented Martin Schulz, a senior economist at the Fujitsu Research Institute.

Since private consumption is weak, the government should take responsibility. "

According to NHK's latest news,

Prime Minister Abe Shinzo and finance minister Taro Aso have agreed to postpone the effective period of the consumption tax until October 2019, without having to dissolve the house of Representatives.

The Japanese government will first announce whether it will postpone the increase of consumption tax again today (June 1st).

A press conference will be held at 6 this afternoon.

Misaki Sato Yasuhiro, President of Mizuho, Japan's second largest consortium, said that if Andouble postponed tax increases and could not give a clear explanation of how the government could reduce the deficit in the future, Japan would face the risk of downgrading the credit rating of Yasuhiro Sato.

He points out that if the government only announces the delay in raising the news of the consumption tax, it will deliver Andouble economics to the market.

Of course, this is not the first time Andouble has postponed raising taxes.

In April 2014, Japan will

From 5% to 8%, and plans to further increase consumption tax to 10% in October 2015.

However, due to the sharp decline in household consumption data after the consumption tax was raised, the Japanese government had to postpone the second increase in consumption tax to April 2017.

According to Japanese finance minister Taro Aso's "script", Japan will first achieve a fiscal surplus in 2020, the path is economic recovery and high tax growth.

At the end of the year, the Japanese Central Bank predicted that the next fiscal year tax would be the highest in 25, reaching 57 trillion and 600 billion yen, mainly from corporate profits, while allowing Japan to reduce its new debt to an annual minimum.

If tax increases are postponed, this goal is obviously more difficult to achieve.

According to McKinsey statistics, an international consultancy, Japan's debt rate (including corporate debt and personal debt) is the highest in the world, with an alarming ratio of GDP to 400%.

Since Abe Shinzo came to power at the end of 2012, he has been committed to implementing Andouble economics.

He has launched the "three arrows" of monetary easing, fiscal stimulus and structural reform, hoping to reverse the decline of Japan's economy.

But in the end, the "three arrows" failed to produce the desired results, and the Japanese economy quickly became silent after its initial rise.

At a G7 meeting last week, Andouble said that the global Lehman crisis could be reproduced, providing reasons for its delay in raising the consumption tax again.

However, the delay in tax increases and the increase in the budget will undoubtedly create enormous pressure on the Japanese government's finances.