Prime Minister Naoto Kan's plan to raise the consumption tax and help save the country from a possible Greece-type fiscal crisis has been effectively sidelined by the ruling bloc's loss of its Upper House majority in Sunday's election.
The election has created a divided Diet, with the Democratic Party of Japan in control of the Lower House and the opposition camp holding the Upper House.
Expected strife within the DPJ will also make it tough for the government to pursue its political agenda, including Kan's hope to eventually raise the 5 percent consumption tax, economists said Monday.