Incoming PM unlikely to loosen fiscal policy much

The stars are aligning for Sanae Takaichi to become Japan’s first female Prime Minister as soon as Tuesday. While the parties that she needs to rely on to secure a parliamentary majority have all been proposing a major fiscal loosening, they will face a reality check once in power. Either way, if we’re right that the budget will record a rare surplus this year, the scope for looser fiscal policy is larger than is widely appreciated.