Bush backs Japan crisis moves

TOUGH new measures to combat Japan's slide into another economic crisis were given strong backing by US President George W Bush at a summit meeting today with Japanese Prime Minister Junichiro Koizumi.

Bush praised Koizumi for his boldness in pushing for structural reforms, which are likely to be highly unpopular with rival politicians and voters. 'I'm confident in this man's leadership ability. I'm confident in his strategy, and I'm confident in his desire to implement that strategy,' said Bush.

However, the US President caused a ripple of concern in foreign exchange markets when he said at a joint Press conference with Koizumi that devaluation of the yen had been discussed, briefly sending it from 132.55 yen against the dollar to 132.8. The remark was quickly dismissed by foreign exchange traders as a mistaken reference to deflation, and was later clarified by US officials.

Koizumi said he had pledged to stick with his programme, however unpopular, and told reporters he had the full support of the President. 'Regarding deflation steps and measures to prevent a financial crisis, I will tackle them firmly. I will take all possible measures. I will not loosen the reins on structural reform,' he said.

He is expected to unveil his plan for reforms by the end of this month and has ordered ministers to come up with firm plans for pulling the economy out of its dive. Top of Koizumi's action list is cleaning up the massive bad debts of the banks, estimated at £200bn.