Japan signals tax hike as manufacturing activity falls

Japan's government has given a strong hint that it will have to raise taxes.

It says emergency spending on disaster relief and reconstruction may cost over $120bn.

Rolling blackouts mean many of Japan's biggest companies have been unable to continue working following the disaster.

So it is not surprising the country's manufacturing activity has hit a two year low.

Seijiro Takeshita from Mizuho International told the BBC that things will get worse before they get better in Japan.