Victory for Abenomics as Japan's maverick PM gets his pick of governor

Haruhiko Kuroda is expected to be the new governor of the Bank of Japan.

The financial press is reporting that Japan's prime minister Shinzo Abe is expected to nominate former finance-ministry official Haruhiko Kuroda as governor of the Bank of Japan. If Kuroda's nomination goes ahead, it will be a victory for Abe's desire to pursue aggressive unconventional monetary policy in order to boost Japan's economic fortunes.

Abe has been engaged in a low-level squabble with his finance minster, former Prime Minister Taro Aso, over the extent of Japan's efforts to boost growth and weaken the yen. Aso, who favours more conventional economic policy, most recently squashed the prime minister's suggestion that Japan might buy foreign bonds as a general policy.

That rift is arguably one of the most important in economic policy today. Just as Britain has been the site of the most rigorous experiment on the effects of voluntary austerity on growth (spoiler: results were negative), Japan is pushing some of the most aggressively expansionary monetary policy ever — and has ideas to go even further. Abe's government has already eroded central bank independence, forcing the Bank of Japan to actively push for growth and inflation; it has "nationalised" capital stock, allowing the state to pay for nominally private sector investment; and it has set explicit targets for the Nikkei, the country's premier stock index, of over 17 per cent growth in one month.

The tussle between Aso and Abe over the foreign bonds purchase was widely seen as a proxy fight for the right to award the governorship, and with the apparent selection of Kuroda, Abe has taken the lead. The governor-to-be has long been a critic of the BoJ's lack of stimulus and will likely encourage it to follow the government's suit in further aggressive, unorthodox measures to hit the new 2 per cent inflation target.

But Reuters' Leika Kihara and Yuko Yoshikawa inject a note of caution to their reporting:

Abe must go through political maneuvering to close the deal, as the nomination must be approved by both houses of parliament including the upper house, where his ruling coalition lacks a majority.

The government hopes to garner support from either the main opposition Democratic Party of Japan (DPJ) or a group of smaller parties to pass the nomination.

There's likely to be an even bigger fight on Abe's hands with one of his two desired deputy governors, Kazumasa Iwata. Iwata is an academic who has called for Japan to print money to fight deflation; his appointment would suggest large scale monetary expansion is on the cards. He was widely reported to be Abe's first choice as governor, before Kuroda was picked as the compromise candidate.

With an ageing population, and flunked recovery from a financial crisis, Britain's experience over the next decade may be scarily similar to Japan's over the last. If Abenomics lifts the country out of its hole, we should all be hoping Mark Carney and the rest of the Bank of England are paying close attention, and preparing to follow suit in case the worst happens.

Haruhiko Kuroda. 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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Sadiq Khan is probably London's new mayor - what will happen in a Tooting by-election?

There will be a by-election in the new mayor's south London seat.

At the time of writing, Sadiq Khan appears to have a fairly comfortable lead over Zac Goldsmith in the London mayoral election. Which means (at least) two (quite) interesting things are likely to happen: 1) Sadiq Khan is going to be mayor, and 2) there is going to be a by-election in Tooting.

Unlike the two parliamentary by-elections in Ogmore and Sheffield that Labour won at a canter last night, the south London seat of Tooting is a genuine marginal. The Conservatives have had designs on the seat since at least 2010, when the infamous ‘Tatler Tory’, Mark Clarke, was the party’s candidate. Last May, Khan narrowly increased his majority over the Tories, winning by almost 3,000 votes with a majority of 5.3 per cent. With high house prices pushing London professionals further out towards the suburbs, the seat is gentrifying, making Conservatives more positive about the prospect of taking the seat off Labour. No government has won a by-election from an opposition party since the Conservative Angela Rumbold won Mitcham and Morden from a Labour-SDP defector in June 1982. In a nice parallel, that seat borders Tooting.

Of course, the notion of a Tooting by-election will not come as a shock to local Conservatives, however much hope they invested in a Goldsmith mayoral victory. Unusually, the party’s candidate from the general election, Dan Watkins, an entrepreneur who has lived in the area for 15 years, has continued to campaign in the seat since his defeat, styling himself as the party’s “parliamentary spokesman for Tooting”. It would be a big surprise if Watkins is not re-anointed as the candidate for the by-election.

What of the Labour side? For some months, those on the party’s centre-left have worried with varying degrees of sincerity that Ken Livingstone may see the by-election as a route back into Parliament. Having spent the past two weeks muttering conspiratorially about the relationship between early 20th-Century German Jews and Adolf Hitler before having his Labour membership suspended, that possibility no longer exists.

Other names talked about include: Rex Osborn, leader of the Labour group on Wandsworth Council; Simon Hogg, who is Osborn’s deputy; Rosena Allin-Khan, an emergency medicine doctor who also deputises for Osborn; Will Martindale, who was Labour’s defeated candidate in Battersea last year; and Jayne Lim, who was shortlisted earlier in the year for the Sheffield Brightside selection and used to practise as a doctor at St George’s hospital in Tooting.

One thing that any new Labour MP would have to contend with is the boundary review reporting in 2018, which will reduce the number of London constituencies by 5. This means that a new Tooting MP could quickly find themselves pitched in a selection fight for a new constituency with their neighbours Siobhan McDonagh, who currently holds Mitcham and Morden, and/or Chuka Umunna, who is the MP for Streatham. 

According to the Sunday Times, Labour is planning to hold the by-election as quickly as possible, perhaps even before the EU referendum on June 23rd.

It's also worth noting that, as my colleague Anoosh Chakelian reported in March, George Galloway plans to stand as well.

Henry Zeffman writes about politics and is the winner of the Anthony Howard Award 2015.