Fears Japan’s Democrats ‘will overspend’

JAPAN’S next prime minister began forming a government yesterday, as investors worried the untested Democratic Party would overspend in a bid to revive the economy or would ruffle ties with Tokyo’s closest ally, Washington.

Sunday’s historic election win by Yukio Hatoyama’s party breaks a deadlock in parliament and will usher in a government that has promised to focus spending on consumers, cut wasteful budget outlays and reduce the power of bureaucrats.

The defeated Liberal Democratic Party (LDP) was left to lick its wounds after its worst election performance since the conservative party was founded in 1955. The party had ruled Japan for almost all of the last half-century.