Japanese Prime Minister Shinzo Abe’s limping “Abenomics” revival programme suffered a fresh blow on Friday when Britain’s vote to leave the European Union sent the yen soaring and threatened to make companies and consumers even more cautious.
The ‘Vote Leave’ campaign claimed unexpected victory over its ‘Britain Stronger in Europe’ rival, after 52 percent of Britons voted to support their plan to leave the 28-nation club.
Abe took office in December 2012 pledging to end decades of deflation in Japan and generate growth in an economy plagued by a shrinking, fast-ageing population with a mix of hyper-easy monetary policy, fiscal spending and reforms.
But the formula has largely failed. The central bank’s aggressive money-printing has failed to accelerate inflation, and anaemic economic growth has discouraged firms from raising wages and households from spending.
“In terms of Abenomics, it was already dead in the water. This will certainly sink it a bit further,” said Jeffrey Kingston, director of Asia studies at Temple University’s Japan campus.
The yen, seen as a safe-haven currency, soared briefly above 100 to the dollar, prompting Finance Minister Taro Aso to signal a readiness to intervene to stem excessive strength.