A Prime Minister Folds to Party Pressure After Historic Election Defeat

Japan’s Prime Minister Shigeru Ishiba is set to resign following sustained pressure from his Liberal Democratic Party (LDP), which has grown increasingly divided after a significant electoral setback in July. The decision, reported by Japan’s NHK public television, comes as Ishiba seeks to prevent further fractures within the ruling coalition. Ishiba, who assumed office in October, had resisted calls to step down for over a month amid the party’s internal disputes [1]. His resignation is expected to be confirmed during a scheduled news conference on Sunday [2].

The July parliamentary election results marked a historic defeat for Ishiba’s ruling coalition, which failed to secure a majority in the 248-seat upper house. This outcome has heightened instability for his government and raised concerns about the political future of Japan’s fourth-largest economy. Ishiba’s decision follows a meeting with Agriculture Minister Shinjiro Koizumi and his mentor, former Prime Minister Yoshihide Suga, who reportedly advised him to resign ahead of a key LDP leadership vote [3]. Suga’s influence appears significant, given his recent public advocacy for Ishiba’s departure [4].

The LDP has initiated a review of its electoral performance, calling for a “complete overhaul” of the party. This has led to increased support for early leadership elections or Ishiba’s resignation. Party Secretary-General Moriyama Hiroshi has already offered to step down to take responsibility for the election results and has left the decision to Ishiba [5]. Other party executives have also indicated willingness to resign if necessary to support a leadership transition. A leadership vote requires the backing of a majority of the LDP’s 295 lawmakers and 47 prefectural chapter representatives, and such support appears to be gathering momentum [6].

Ishiba had previously insisted on staying in office to avoid a political vacuum during a period of economic and geopolitical uncertainty. His administration has faced challenges including U.S. tariffs, inflation, rice policy reforms, and regional tensions. However, the party’s internal divisions and the loss of the upper house majority have weakened his position and increased the likelihood of a leadership shift. Ishiba’s last major policy achievement prior to his expected resignation was finalizing a trade deal with the United States, under which Japan pledged $550 billion in investments in exchange for reduced tariffs on key sectors, including automobiles [7].

The political uncertainty has already had economic repercussions. The yen and Japanese government bonds experienced a sell-off last week, with the yield on the 30-year bond hitting a record high. Market speculation has focused on the possibility of Ishiba being replaced by a leader advocating for looser fiscal and monetary policies, such as Sanae Takaichi, who narrowly lost the LDP leadership run-off earlier this year. Takaichi has been a vocal critic of the Bank of Japan’s recent interest rate hikes [8].

Source:

[1] Japan's Prime Minister Shigeru Ishiba to resign (https://www.coastreporter.net/world-news/japans-prime-minister-shigeru-ishiba-to-resign-11177854)

[2] Japan's embattled Prime Minister Ishiba to resign, media report (https://www.france24.com/en/asia-pacific/20250907-japan-s-embattled-prime-minister-ishiba-to-resign-media-report)

[3] Japan's LDP to consider calling leadership election (https://www3.nhk.or.jp/nhkworld/en/news/20250902_13/)

[4] Japan PM Ishiba plans to resign to avoid party split, NHK says (https://www.cnbc.com/2025/09/07/japan-pm-ishiba-plans-to-resign-to-avoid-party-split-nhk-says.html)