Japan tries pounds 125bn therapy

KEIZO OBUCHI, the Japanese Prime Minister, unveiled his government's latest attempt to spend its way out of recession yesterday. But his Finance Minister hinted he was about to resign, faced with a new round of depressing economic figures.

"Our paramount issue is setting the groundwork for a more healthy functioning of the financial system and resuscitating the economy,'' Mr Obuchi said at the opening of an extraordinary session of the Diet. The session's main task is to pass a supplementary budget to allow the government to spend 24 trillion yen (pounds 125bn) to encourage public spending. It follows a disbursement of 17 trillion yen in April. Mr Obuchi predicted the latest spending would create a million jobs.

But figures yesterday showed no signs that the economy is moving out of recession. Unemployment remained at its highest level yet, 4.3 per cent in October, the third consecutive rise.

In another blow to Mr Obuchi, the most respected member of his cabinet, Kiichi Miyazawa, suggested he would soon resign as Finance Minister, dismaying colleagues in the ruling Liberal Democratic Party. "It is not time for him to consider resigning," said the powerful cabinet secretary, Hiromu Nonaka. Mr Miyazawa, a former prime minister, had to be begged to take on the post in July and it seems he has had enough after four months in one of the most thankless jobs in world politics.

Mr Obuchi also spoke about plans to build four spy satellites to avoid a repeat of an incident in August, when a North Korean test rocket flew over its northern territory undetected. "The missile test by North Korea created considerable concern. It is necessary that we work to collect the appropriate information and establish measures to collect, analyse and disseminate information which has a bearing on regional security and crisis management," he said.