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23m ago

Ahead of Saturday Vote, LDP Contest Pits Takaichi’s Big-Spend Plan Against Koizumi’s Tax Relief

The outcome could steer Japan toward heavier state spending or cautious tax relief, a choice investors are already pricing.

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Former Economic Security Minister Sanae Takaichi speaks during the Liberal Democratic Party (LDP) Presidential Election Candidate Debate at Japan National Press Club in Tokyo, Japan, on Sept. 24, 2025. Jia Haocheng/Pool via REUTERS
Japan's former internal affairs minister Sanae Takaichi delivers a speech at the kick-off of the campaign for the LDP presidential election in Tokyo, Japan, September 22, 2025. Franck Robichon/Pool via REUTERS
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Overview

  • Liberal Democratic Party members and lawmakers vote Saturday to choose the party president, a decision that typically determines the next prime minister even though the LDP has lost working majorities.
  • Surveys reported by Japanese media indicate Shinjiro Koizumi leads among the 295 LDP lawmakers while Sanae Takaichi is ahead among rank‑and‑file members, setting up a possible runoff with shifting dynamics.
  • Takaichi has outlined a 'crisis management investment' program with proactive state financing for sectors such as energy, food security, semiconductors, AI, biotechnology, advanced medicine and defense, and she has pledged aggressive fiscal measures.
  • Koizumi and some rivals favor tax cuts to ease living costs and greater fiscal restraint, and analysts say a Koizumi or Yoshimasa Hayashi win is less likely to unsettle the Bank of Japan’s policy path.
  • Markets are bracing for the result, with analysts warning a Takaichi victory could steepen the JGB yield curve and weaken the yen, while a Koizumi outcome may prompt a muted reaction; the incoming leader is also expected to host President Donald Trump later in October and face questions over a reported U.S. investment‑trade deal Takaichi has suggested could be revisited if unfair.