<figure id="attachment_449133" aria-describedby="caption-attachment-449133" style="width: 1872px" class="wp-caption alignnone"><a href="#" data-ident_hash="c811864c"><img src="https://res.cloudinary.com/fridaydigital/image/private/t_article_image/wpmedia/2025/12/847d398b8d4f1bf1b991001ec4a0ea0a.jpg" alt=""></a><figcaption id="caption-attachment-449133" class="wp-caption-text">In between party leader debates, Mr. Takaichi suddenly looked up to the heavens. Forty days have passed since he took office, and the festive season is over, but will he be able to produce results with the economic policies he relies on?</figcaption></figure>
<h3><span class="strongInContent"> Working and working and working, but life is not getting any easier</span></h3>
<p> What kind of future did he see beyond his gaze?</p>
<p> On December 1, this year&#8217;s new word and buzzword of the year was announced, and Prime Minister Sanae Takaichi (64), upon her election as LDP president, chose &#8220;I will work and work and work.</p>
<p><span class="strongInContent"> I sleep two to four hours every day, and the rest of the time I work. It is not unusual for me to sleep on the sofa so that I can get up right away, and my schedule for the year-end and New Year&#8217;s holidays is already filled with visits to greet people in my hometown and other events. He is so stressed out that he sings karaoke at his favorite restaurant to relieve his stress.</span></p>
<p> The scene at the beginning of this article was taken during the first debate between the party leaders. In a flash of inspiration, Takaichi looked up into the sky&#8230;her vision had cleared up and she could see a rosy future for herself, as the Cabinet&#8217;s approval rating had not declined much after her comment about the &#8220;existential crisis&#8221; over the Taiwan emergency&#8230; &#8230;but the next storm is already looming. The limits of Takaichi&#8217;s economic policy, known as &#8220;Sanae-nomics,&#8221; are approaching.</p>
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<p> Sanae-no-mix is designed to stimulate the economy through an aggressive fiscal stimulus package. This is reflected in this year&#8217;s supplementary budget proposal. The total amount is 18.3 trillion yen, up from 13.9 trillion yen the previous year. Excluding the COVID-19 crisis, this is the largest ever.</p>
<p> However, there is a major pitfall.</p>
<p><span class="strongInContent"> In addition to the abolition of the provisional gasoline tax rate proposed by the four opposition parties, the government has swallowed Komeito&#8217;s proposal for a 20,000 yen cash handout for children up to age 18 and the Restoration Party&#8217;s proposal for subsidies to reduce the burden of electricity and gas rates. The government seems to be busy with the management of the Diet and the disbursement of funds to the opposition parties, but the important thing is the source of the funds: 11.7 trillion yen in new government bond issues are included in the budget. Since the previous year&#8217;s supplementary budget included 6.7 trillion yen in new government bond issues, this amount is almost double that of the previous year&#8217;s budget.</span></p>
<p><span class="strongInContent"> Uncontrolled issuance of JGBs will result in a loss of confidence in fiscal management, which in turn will accelerate the depreciation of the yen. If spending continues to expand without the prospect of securing a stable and permanent source of revenue, the yen will further depreciate.</span></p>
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<div data-friday-nextpage-lead=" There will be a &quot;triple depreciation&quot; as well."></div>
<h3><span class="strongInContent">Structural Limitations of Sanaenomics</span></h3>
<p> In fact, the yen&#8217;s depreciation has not been halted and the consumer price index has risen for 50 consecutive months. Mortgage interest rates have also begun to rise in value since last year and continue to rise steadily, making life more difficult.</p>
<p> The irony is that the fiscal stimulus that has taken so many risks has not contributed much to the improvement of people&#8217;s lives. A veteran member of the Liberal Democratic Party (LDP) asserts, &#8220;We are at the end of our rope.</p>
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<p><span class="strongInContent"> The weak yen will cause the cost of raw materials and imported foodstuffs to soar, which will reduce the effect of the spending spree. The price of gasoline, which has been reduced, is soaring, and there are signs posted at gas stations saying, &#8216;The full amount of the tax cut will not be lowered after the end of December.</span></p>
<p><span class="strongInContent"> The only way to solve the weak yen is for the Bank of Japan to raise interest rates and tighten monetary policy. However, if interest rates are raised, it is obvious that the Nikkei average, which has been hovering around 50,000 yen, will plummet. As long as the Bank claims to revitalize the economy, it should avoid such a situation. It is clear that Sanaenomics, which is unable to provide answers across the board, has reached its structural limits. Still, Mr. Takaichi refuses to listen.&#8221;</span></p>
<p> While he is wringing his hands, the yen is depreciating at an ever-increasing rate. Whenever consumer behavior stalls, the Takaichi administration will draw up a supplementary budget that relies on government bonds and take additional economic measures. This will only make the fiscal deterioration worse, and a negative spiral is about to occur. The end result is an unprecedented economic recession.</p>
<p><span class="strongInContent"> If large-scale fiscal stimulus without financial resources is continued while interest rates remain high, the risk of a &#8220;triple depreciation,&#8221; in which the currency, stocks, and government bonds all plummet, will increase. Japan&#8217;s economy may fall into the longest recession it has ever experienced.&#8217; The triple depreciation occurred in 22 years as a result of the UK&#8217;s Liz Truss government&#8217;s repeated fiscal stimulus without financial resources in the same way. There is no guarantee that a Japanese version of the &#8216;Truss Shock&#8217; will not occur in the future,&#8221; said Keisuke Nakahara, an economic analyst.</span></p>
<p> Sanaenomics will trigger a high market recession.</p>
<p> From the December 19 and 26, 2025 issue of FRIDAY</p>
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 Takeshi Kinugawa

 Prime Minister Sanae Takaichi's economic policy, commonly known as "Sanae-nomics. The idea is to stimulate the economy through aggressive fiscal stimulus, but a veteran member of the Liberal Democratic Party (LDP) asserts, "It has reached its limits. What are the structural limitations of SanaeNomics?

The yen&#8217;s depreciation will not be halted and life will only become more difficult&#8230;A &#8220;high market recession&#8221; is coming due to the limits of Sanaenomics.

The yen’s depreciation will not be halted and life will only become more difficult…A “high market recession” is coming due to the limits of Sanaenomics.

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