Japan targets the stock market

The Nikkei at 13,000 is the new target.

Japan's stock market is on a tear today, apparently due to yet another unconventional economic move from its populist right-wing government. After attacking its central bank's independence, "nationalising" industrial stock and announcing a £70bn stimulus package for the stagnant economy, the country's economic ministry made another shock move over the weekend.

Akira Amrai, Japan's economic minister, said in a speech that:

It will be important to show our mettle and see the Nikkei reach the 13,000 mark by the end of the fiscal year (March 31)… We want to continue taking (new) steps to help stock prices rise.

Before and after… the Nikkei jumped 200 points after Amrai's comments.

The Nikkei at 13,000 would require 17 per cent growth in the next two months, which is ambitious. But now that we've had a change to see how the market reacts to such the move, it's looking very possible indeed.

The government announcing it has a stock market target is largely a self-fulfilling prophecy: stock markets tend to price in future gains, and a government announcing that a certain level is now a matter of policy is as near certain as gains can get. Even if it undershoots, it's still clear that the statement has helped Japanese companies. The biggest direct concern is that such a statement might lead to a dangerous asset bubble, but a Nikkei of 13,000 would, if anything, remain underpriced. So long as the government doesn't get carried away with its success, the move seems to be a smart one.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Forget gaining £350m a week, Brexit would cost the UK £300m a week

Figures from the government's own Office for Budget Responsibility reveal the negative economic impact Brexit would have. 

Even now, there are some who persist in claiming that Boris Johnson's use of the £350m a week figure was accurate. The UK's gross, as opposed to net EU contribution, is precisely this large, they say. Yet this ignores that Britain's annual rebate (which reduced its overall 2016 contribution to £252m a week) is not "returned" by Brussels but, rather, never leaves Britain to begin with. 

Then there is the £4.1bn that the government received from the EU in public funding, and the £1.5bn allocated directly to British organisations. Fine, the Leavers say, the latter could be better managed by the UK after Brexit (with more for the NHS and less for agriculture).

But this entire discussion ignores that EU withdrawal is set to leave the UK with less, rather than more, to spend. As Carl Emmerson, the deputy director of the Institute for Fiscal Studies, notes in a letter in today's Times: "The bigger picture is that the forecast health of the public finances was downgraded by £15bn per year - or almost £300m per week - as a direct result of the Brexit vote. Not only will we not regain control of £350m weekly as a result of Brexit, we are likely to make a net fiscal loss from it. Those are the numbers and forecasts which the government has adopted. It is perhaps surprising that members of the government are suggesting rather different figures."

The Office for Budget Responsibility forecasts, to which Emmerson refers, are shown below (the £15bn figure appearing in the 2020/21 column).

Some on the right contend that a blitz of tax cuts and deregulation following Brexit would unleash  higher growth. But aside from the deleterious economic and social consequences that could result, there is, as I noted yesterday, no majority in parliament or in the country for this course. 

George Eaton is political editor of the New Statesman.