The Japanese government yesterday unveiled a series of emergency measures to shore up the slumping economy, including an income tax cut, fuel subsidies and government loans to small and medium-size companies, in a stimulus package worth Y11,500bn.

The package, which includes only Y1,800bn in additional spending and nearly Y10,000bn ($91.5bn, €62bn, £50bn) in government loans and credit guarantees to small business, follows the biggest economic contraction in seven years last month, combined with steadily rising inflation, which yesterday topped 2 per cent for the first time in a decade.