The ratings agency Standard & Poor's warned yesterday that it might cut Japan's sovereign grade as the ruling party's mauling in a weekend election created new hurdles for the plans of the new Prime Minister, Naoto Kan, to cut huge public debt.
Voters dealt Mr Kan's Democratic Party of Japan (DPJ) a sharp rebuke, depriving it and a tiny ally of an upper-house majority less than a year after the DPJ swept to power promising change from decades of conservative rule. The Democrats still control the powerful lower house. But they will need help from other parties to push bills through the upper house as they struggle to fix tattered public finances.
Mr Kan flatly rejected calls from opposition parties for a snap lower house election. "Only about one month has passed since the launch of my administration and I want the chance to firmly manage this administration with the people of Japan watching," he said.