Japan’s government is considering increasing an economic stimulus package that will be drawn up later this year to more than 10 trillion yen ($98 billion) in the wake of Britain’s shock vote last week to quit the European Union, government and ruling party sources told Reuters on Monday.
The government had earlier envisaged a stimulus package of between 5 trillion to 10 million yen for an extra budget that is expected to be announced later this year.
But more might be needed if a prolonged reaction to Brexit endangers Japan’s fragile economic recovery, the sources said on condition of anonymity.
Share prices have fallen and the yen has risen, making exports less competitive, in the wake of Brexit, putting Japan’s economy under more strain.
The stimulus package will be discussed on Tuesday, when Prime Minister Shinzo Abe chairs a meeting of the Council of Economic and Fiscal Policy (CEFP), the government’s top advisory panel.
The ruling Liberal Democratic Party (LDP) will also meet to discuss the issue.
Abe summoned Finance Minister Taro Aso and Deputy Bank of Japan (BOJ) Governor Hiroshi Nakaso on Monday to talk through the response to developments after the Brexit vote rocked global markets.
While Abe instructed the BOJ to provide ample liquidity to the markets, his government and ruling bloc are ready to provide fiscal support for the economy, the sources said. ($1 = 102.1300 yen)