The present concern about Sanae Takaichi’s victory in the leadership race of the Liberal Democratic Party is the behaviour of Japan’s financial markets, as analysts had predicted a fall in the price of Japanese government bonds if she won.

Margaret Thatcher, whom Takaichi reveres, is associated with market-based policies, including the privatization of state-owned enterprises, deregulation, and tax reform. However, Takaichi’s pledges are the exact opposite. While she promises aggressive fiscal stimulus to cope with high prices, she is not afraid to say publicly that raising the consumption tax ‘would be stupid’. Financial markets are understandably concerned.

Takaichi apparently intends to inherit the economic policies of his predecessor, Shinzo Abe. However, while ‘Abenomics’ may be a booster shot to end chronic deflation, it does not contribute to a fundamental solution. The time for the Japanese economy to rely on stopgap measures has long passed; there is an urgent need to cut expenditures and spend wisely simultaneously. If she ignores this reality, she may end up following in the footsteps of Liz Truss, not Thatcher.