Abe Says Wages, Jobs Key to Beating Deflation, Pledges EU Deal

Japanese Prime Minister Shinzo Abe said wages and employment must rise for his country to beat deflation, as he promised to secure an economic partnership between Japan and Europe.

“To overcome deflation, it is absolutely necessary for wages and employment to move in a visible way in a positive direction,” Abe said in a speech in London today. Improving sentiment among small and mid-size companies shows “a discernible feeling of growth has gradually come to permeate society.”

Abe has pledged to revive Japan’s economy by implementing fiscal stimulus and reducing business regulation, while promising structural economic changes and restarting the nation’s nuclear industry. He said today his focus is to boost Japan’s growth while reinstating fiscal soundness.

The prime minister said his policies “have led us to the point where we are just about to get out of deflation.”

Abe said Japan’s government will revise labor regulations and work practices to reflect “the new era” and will “improve our corporate taxation still further.”

An increase in Japan’s consumption tax hasn’t diminished consumption “to the extent we had feared,” he said, adding that “more and more people now take an optimistic view as a result.”

Energy, Trade

Abe also stressed the need to “realize a stable and inexpensive energy supply in order to achieve economic growth.”

Abe, who met U.K. Prime Minister David Cameron today, pledged to secure a free trade agreement between Japan and the European Union, with an agreement in principle by 2015.

“I will make it a reality, whatever it takes,” he said. “My commitment is firm.”

The U.K. and Japan discussed developing existing defense and security cooperation “to support Japan’s enhanced role in global security and peacekeeping,” the U.K. government said in an e-mailed statement today.

Abe said today joint foreign and defense consultations between Japan and the U.K. will increase. He promised to “make steady efforts” to reach a bilateral Acquisition and Cross-Servicing Agreement.

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