(Bloomberg) — Support for Japanese Prime Minister Shigeru Ishiba’s ruling coalition continues to decline ahead of next weekend’s elections, two polls showed, raising the possibility that the vote could result in a weakened and unstable government .
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A Kyodo News poll found that 22.6% of respondents supported Ishiba’s ruling Liberal Democratic Party in the election, with the lead over the opposition Constitutional Democratic Party narrowing to 8.5 from 14% in a survey a week earlier %.
Another poll by the Asahi newspaper showed that the LDP is likely to lose its majority in the lower house of parliament and may not even secure a majority in the coalition with its long-term partner Komeito.
Failure to secure a clear mandate for his government would complicate Ishiba’s ability to press ahead with policy initiatives and weaken his leadership in the party. If Ishiba fails to secure a majority for the ruling coalition, it would be seen as a clear loss that could threaten his survival as leader.
“If the LDP and Komeito fail to win a majority, the impact will be significant. The future of the Ishiba government would become uncertain,” said Koya Miyamae, economist at SMBC Nikko Securities Inc.
The LDP only just picked Ishiba as leader last month as their cleanest option to retain power, after a funding scandal eroded support and fueled former Prime Minister Fumio Kishida’s decision to resign.
Both polls showed that around 40% of respondents are still undecided, meaning the likely outcome of the election is still far from clear. Several lawmakers who were not endorsed as LDP candidates in the election due to their involvement in the financing scandal would still largely support the coalition if they keep their seats and provide more potential support for the government than the polls show.
But if the elections leave Ishiba in a vulnerable position, he would probably have to listen more to the views of Komeito and his opponents within the party or even an additional coalition partner. This can lead to more expenses and an inflated extra budget. It could also complicate communications with the Bank of Japan as it worries about the timing of its next rate hike.
The loss of a majority to the coalition would lead to market speculation that Ishiba will struggle to get his way on policy areas such as BOJ policy normalization and fiscal consolidation, wrote Keisuke Tsuruta, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, in a research note.
Ishiba has largely campaigned on cleaning up the ruling party, providing further aid to voters struggling with the cost of living and revitalizing the country’s regional economies. The LDP leader may have to increase spending on price-control measures and try to cool talks on another rate hike in the coming months if he needs to shore up support for a coalition government.
“It is possible that spending will increase and it will become more difficult to implement fiscal consolidation as upper house elections loom next year,” Miyamae said.
All polls so far have shown that the LDP has clearly won the most votes, allowing it to lead any government after the elections. But previous polls showed the ruling coalition, in power since 2012, would retain a majority, while the LDP alone might fail to gain the 233 seats needed for a majority in the lower house, the most powerful of the two rooms.
The Asahi poll predicts that the LDP will lose around 50 seats and not win a majority on its own, while Komeito is expected to lose some seats. The only time the LDP failed to win the most votes in elections for the House of Commons was in 2009, when it won only 119 seats.
Public support for the LDP has fallen following revelations that party members secretly lined their pockets with money from supporters. Ishiba, whose administration began on October 1, has barred the 12 lawmakers most involved in the case from representing the party in the elections. If they win, they could rejoin the LDP and help the party stay in power.
Ishiba, a former defense minister, is a strong supporter of higher defense spending. Komeito has not opposed increased defense spending, but has sought to impose limits on the use of military force. Talks about clarifying how taxes will be raised to finance higher defense budgets could also be put on hold if Ishiba fails to win convincingly.
The new government has already promised to make an upcoming economic package bigger than last year’s, which was financed with an additional ¥13 trillion ($87 billion) budget.
–With help from Keiko Ujikane and Masahiro Hidaka.
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