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2016年6月29日 (水)

英の離脱と日本 拙速避け冷静に対応を

June 28, 2016 (Mainichi Japan)
Editorial: Japan must remain calm in wake of 'Brexit' referendum
英の離脱と日本 拙速避け冷静に対応を

In response to the so-called "Brexit" referendum, in which those pushing for Britain to leave the European Union (EU) won by a small margin, the Japanese government has been holding a series of meetings to discuss measures to mitigate possible negative effects on the Japanese economy.

When the results of the vote came out on June 24, a meeting of involved ministers was held with Prime Minister Shinzo Abe in attendance, and on June 25, an emergency meeting was held among the Finance Ministry, the Financial Services Agency and the Bank of Japan (BOJ). The government and the BOJ held an emergency meeting on June 27, and the Council on Economic and Fiscal Policy is to meet on June 28.

Liberal Democratic Party (LDP) policy chief Tomomi Inada has stated that measures, including foreign exchange intervention, should be instituted, and some are calling for economic policies that are to be mapped out in the fall to be expanded to at least 10 trillion yen.

Is this the government's way of showing the public and the markets that it's taking watertight measures to prevent a crisis? As the House of Councillors election -- about which the ruling LDP has said the economy is a priority issue -- approaches, any market turmoil could work to the government's and ruling coalition's disadvantage.

How smart it is, though, for the government and the BOJ to react so drastically at this point in time? It's hard to believe that a vote in favor of Britain's exit from the EU could have a direct and immediate effect on small- to mid-sized Japanese companies. Suggesting such effects could inadvertently make Japan the target of speculators, and increase economic burdens on the public in the future. What we need now is levelheaded analyses and careful deliberation of the merits and demerits of measures.

The latest Brexit "shock" differs in nature from the shock Japan experienced in the past when its economic bubble burst. It's questionable whether traditional policy measures such as public spending and monetary easing will be effective in the latest case.

Moreover, depending on how things unfold from here on out, the economic impacts will differ greatly. British Chancellor of the Exchequer George Osborne has stated that unless there is a "clear view" of Britain after it leaves the EU, he will not begin the procedures necessary for an actual exit. For Japan, amid these circumstances, to rush to implement full-fledged fiscal measures ahead of other countries will only serve to expose Japan's discomposure.

Even in the epicenter of it all, where the pound plummeted, Britain is trying to keep its cool, with Osborne stating that the British economy remains strong, and can withstand the repercussions that Brexit could have.

Japanese finances are in a far worse state than Britain's. If the Japanese government moves to increase public spending on a massive scale, on top of the re-postponement of the consumption tax hike that Prime Minister Abe recently decided on, the Japanese public will have an even heavier burden to bear in the future.

There also is a limit to how far the BOJ can relax monetary policy. The additional purchase of investment trust shares by the BOJ may cause a temporary rise in stock market prices. But if the central bank were to be in possession of massive amounts of assets that have the risk of plummeting, confidence in the Japanese economy could fall and the yen could take a nosedive, generating turmoil in markets.

We must not forget that employing stopgap measures whenever there were slight fluctuations in markets -- so as to win elections and maintain approval ratings -- is what led to Japan having the worst debt among industrialized countries and the BOJ's massive stockpile of government bonds.


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