Explainer-Japan ruling party outlook darkens after coalition partner quits

TOKYO (Reuters) -Japan's Komeito quit the ruling coalition on Friday, dealing a blow to new Liberal Democratic Party leader Sanae Takaichi's premiership bid and potentially to her party's grip on power in the world's fourth-largest economy.

TAKAICHI'S PM BID JUST GOT HARDER

The LDP-Komeito coalition had lost its combined majority in both houses of parliament over the past year under outgoing Prime Minister Shigeru Ishiba.

Takaichi, however, was widely expected to have a solid chance of becoming Japan's first female prime minister with the support of Komeito when parliament votes to select a new premier this month, as the LDP is still by far the biggest party.

But if the three major opposition parties - the Constitutional Democratic Party of Japan, the Democratic Party for the People, and the Japan Innovation Party - put forward a unified candidate, their votes would exceed the number of seats held by the LDP alone in parliament's powerful lower chamber, potentially ending Takaichi's hopes.

The prime minister is picked by a simple majority vote in parliament, with runoff votes if there is no clear winner in the first round.

OPPOSITION FACES ITS OWN HURDLES TO UNITY

Such a patched-up coalition would make a chaotic and fragile administration, with alliance members not seeing eye to eye on many key issues, analysts say.

If the opposition parties failed to come up with a single candidate and chose to vote for their respective party leaders, Takaichi would still be elected prime minister.

Her minority government would have a tough time passing bills and moving the political process forward, however. Calling a snap election would also be risky now that her party has lost Komeito's election-related support, ending their 26-year partnership.

WEAKENED LDP FACES LEGISLATIVE HURDLES

Komeito's departure also makes it harder for the LDP to pass budgets and fiscal legislation, potentially leading to policy concessions or spending trade-offs, all likely to result in fiscal expansion.

The LDP is expected to accelerate efforts to forge new alliances with some of the main opposition parties such as the DPP and the JIP.

The DPP, led by Yuichiro Tamaki, is indeed seen as ideologically aligned with Takaichi.

Tamaki has called on the LDP to honour a three-party agreement reached last December among their two parties and Komeito that included scrapping the gasoline surtax and raising the income tax exemption threshold.

Takaichi is reportedly open to both proposals, raising the prospect of closer cooperation between their two parties.

(Reporting by Kiyoshi Takenaka and Makiko Yamazaki; Editing by Hugh Lawson)

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