In an interview with the Financial Times, Mr Yosano said there could be no quick fixes through fiscal spending. He painted a gloomy economic picture, saying that companies were preparing to cut thousands of non-permanent jobs at the end of the year when fixed-term contracts expired.

“I cannot tell you it will be a bright next day. The time for endurance has come,” he said. “We are moving to the next phase of shrinking consumption – some call it deflation – production going down and prices going down.” October industrial output fell 3.1 per cent month on month and is projected to fall 6.2 per cent in November.

Richard Jerram, economist at Macquarie Securities, said the decline was unprecedented. Data in November showed Japan sank into recession when the economy shrank 0.1 per cent in the three months to September 30.