When he won a second term as prime minister last December, Shinzo Abe vowed to fight Japan’s economic malaise with “three arrows”. The first two – a hefty fiscal stimulus and an unprecedented monetary loosening – were fired swiftly and look set to hit the target. The third – structural reforms – remains stuck in Mr Abe’s quiver.

Unshackling the supply side of Japan’s economy is essential if “Abenomics” is to succeed. Inflationary expectations have begun to pick up on the back of the Bank of Japan’s monetary largesse. Eventually, investors will demand a higher interest rate to compensate for rising prices. Without sustained growth, Tokyo’s debt mountain – currently a staggering 230 per cent of gross domestic product – could quickly become unsustainable.

Last June the prime minister unveiled a checklist of vague promises – including a deregulating agenda – which left investors unimpressed. However, markets gave him the benefit of the doubt. The hope was that Mr Abe would become more daring after the upper house elections, held in July. Yet in spite of securing a majority, he has remained cautious. In an interview with the Financial Times, Mr Abe ruled out a speedy liberalisation of the labour market, as he feared strong domestic opposition.