(Bloomberg) — Support for Japanese Prime Minister Shigeru Ishiba’s ruling coalition is continuing to soften in the runup to this coming weekend’s election, two polls showed, indicating the possibility that the vote may result in a weakened and unstable administration.
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A Kyodo News poll showed 22.6% of respondents backing 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 taken a week earlier.
Another poll by the Asahi newspaper showed the LDP will likely lose its majority in the lower house of parliament and may not even secure a majority in coalition with its long-running partner Komeito.
Failure to win a clear mandate for his government would complicate Ishiba’s scope for pressing ahead with policy initiatives and weaken his leadership of the party. If Ishiba falls short of achieving a majority for the ruling coalition, that would be seen as a clear loss that may threaten his survival as leader.
“If the LDP and Komeito fail to secure a majority, the impact will be significant. The future of the Ishiba administration would become uncertain,” said Koya Miyamae, an economist at SMBC Nikko Securities Inc.
The LDP only just selected Ishiba as leader last month as their cleanest option for maintaining power after a funding scandal battered support and triggered the decision by former Prime Minister Fumio Kishida to step down.
Both polls showed around 40% of respondents are still undecided, leaving the likely outcome of the election still far from clear. Several lawmakers who have not been endorsed as LDP candidates in the election due to their involvement in the funding scandal, would still largely support the coalition if they hold on to their seats offering more potential support for the administration than shown in the polls.
Still, if the election leaves Ishiba in a vulnerable position, he would likely have to listen more to the views of Komeito and his opponents within the party or even an additional coalition partner. That may lead to more spending and an inflated extra budget. It might also complicate communications with the Bank of Japan as it mulls the timing of its next interest rate hike.
The coalition losing a majority would lead to market speculation that Ishiba will struggle to get his way on policy direction such as BOJ policy normalization and fiscal consolidation, Keisuke Tsuruta, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, wrote in a research note.
Ishiba has largely campaigned on cleaning up the ruling party, offering further help to voters struggling with a cost-of-living crunch and revitalizing the nation’s regional economies. The LDP leader might have to ramp up spending on price mitigation measures and try to cool talk of another interest rate hike in the coming months if he needs to firm up support for a coalition government.
“It’s possible spending would expand and it will become harder to push toward fiscal consolidation with an upper house election looming next year,” Miyamae said.
All polls so far have shown the LDP clearly winning the most votes, positioning it to lead any administration after the election. But previous polls had signaled that the ruling coalition, which has been in power since 2012, would keep a majority while the LDP alone may fail to win the 233 seats needed for a majority in the lower house, the more powerful of the two chambers.
The Asahi poll forecast that the LDP will lose roughly 50 seats and fall short of a majority on its own, with Komeito projected to lose some seats. The only time the LDP has failed to win the most votes in a lower house election was in 2009, when it won only 119 seats.
Public support for the LDP has fallen following revelations that members of the party were secretly lining their pockets with funds from supporters. Ishiba, whose administration started on Oct. 1, has barred the 12 lawmakers most deeply implicated in the affair from representing the party in the election. Should they win, they could rejoin the LDP and help the party stay in power.
Ishiba, a former defense minister, is a strong advocate of increased defense spending. Komeito hasn’t opposed increased defense spending but it has sought to impose limits on the use of military force. Talk of clarifying how taxes will be raised to fund higher defense budgets may also be iced if Ishiba fails to win convincingly.
The new administration has already pledged to make an upcoming economic package larger than last year’s, which was funded by a ¥13 trillion ($87 billion) extra budget.
–With assistance from Keiko Ujikane and Masahiro Hidaka.
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