Japanese politics was in a state of flux Monday, after voters punished Prime Minister Shigeru Ishiba’s scandal-tainted ruling coalition in a weekend election, causing the Liberal Democratic Party and its partners to lose their parliamentary majority for the first time in 15 years.

But the fractured nature of the opposition means the LDP, which has ruled Japan almost continuously since its formation in 1955, remains most likely to form the next government, either with a parliamentary minority or some sort of cobbled together grand coalition.

Speaking Monday, Mr. Ishiba was defiant, saying that despite the “exceptionally harsh judgment from the public,” the LDP and its coalition partner Komeito will seek to stay in power.

“We are not thinking of instantly forming a new coalition at this point,” Mr. Ishiba said, according to public broadcaster NHK. “I think we need to start by discussing how to introduce each party’s policies with a humble attitude. In the process , we will work to build a relationship of trust with other parties, so that people will have faith in us that we are working together for the sake of the people.”

The LDP and Komeito took 215 seats in the lower house of parliament, down from 279 seats, as voters punished the incumbents over a funding scandal and a cost-of-living crunch. Two cabinet ministers and Komeito’s leader, Keiichi Ishii, lost their seats .

The biggest winner of the night, the main opposition Constitutional Democratic Party of Japan (CDPJ), had 148 seats, up from 98 previously, but also still well short of the 233 majority.

Support from smaller parties, such as the Democratic Party for the People (DPP) or the Japan Innovation Party (JIP), who won 28 and 38 seats respectively, could now be key for the LDP.

DPP chief Yuichiro Tamaki and JIP leader Nobuyuki Baba have both said they would rule out joining the coalition but are open to ad hoc cooperation on certain issues. Both are also being courted by the CDPJ, but longstanding disputes within the fractious Japanese opposition means coming to an agreement may be difficult.

The constitution gives parties 30 days to hash out a grouping that can govern, but Mr. Ishiba’s party will try to rush this, convening a special parliamentary session to select the prime minister on November 11, according to Kyodo News.

Tobias Harris, founder of Japan Foresight, a political risk advisory firm, said it was unlikely Mr. Ishiba “will survive to lead a new government as prime minister,” though he could stay on in a caretaker role while the LDP picked a new leader .

Mr. Ishiba was himself only selected a month ago, in a tight fought battle. He had been counting on a honeymoon bump in popularity to carry him through the election, but Sheila Smith, a senior fellow for Asia-Pacific studies at the US- based Council on Foreign Relations, said public frustration with the ruling party “has been obvious for some time.”

The LDP has been tainted by twin funding scandals, which burst into view after the dramatic assassination of former prime minister Shinzo Abe in 2022. Mr. Abe’s killer, Tetsuya Yamagami, was motivated by the former longtime LDP leader’s ties to the Unification Church, also known as the Moonies, and in the wake of his act, longtime rumours about the church’s closeness to the LDP were confirmed by the Japanese media, which had been accused of sitting on the story for decades.

In the wake of Mr. Abe’s assassination, numerous LDP parliamentarians and government officials had to acknowledge having received money or support from the Unification Church, which was stripped of its tax-protected status last year.

Making things worse from the LDP were subsequent revelations of a slush fund linked to Mr. Abe’s wing of the party, reinforcing suspicions among voters about the LDP’s finances and secret backers. Of 46 LDP members involved in the slush fund scandal, 28 lost their seats in this weekend’s election, NHK reported.

With both the LDP and CDPJ reaching out to potential partners, Mr. Ishiba warned a protracted period of uncertainty could be damaging for the country.

“We cannot allow not even a moment of stagnation as we face very difficult situations both in our security and economic environments,” he said, a sentiment echoed by Japan’s most powerful business lobby, which urged the formation of a grand coalition centered on the LDP -Komeito alliance.

Masakazu Tokura, head of the Keidanren lobby, said the country faced severe challenges, including boosting energy security and maintaining the momentum for wage hikes. The political chaos could also pressure the Bank of Japan to backtrack efforts on to raise interest rates and wean the country off decades of monetary stimulus, a policy that was criticized by multiple parties during the election.

Writing in the Japan Times, Michael MacArthur Bosack, a special adviser for government relations at the Yokosuka Council on Asia-Pacific Studies, said blame for the election result sat squarely on Mr. Ishiba’s shoulders.

“Despite promising a new type of government, his choices for ministers reflected old school politics as he awarded longtime allies and punished opponents,” Mr. MacArthur Bosack said. “Only four ministers were younger than 60 and only two women earned senior appointments. It was not the sort of Cabinet that a prime minister promising modern politics would put together.”

By calling a snap election soon after taking control of his party, he added, Mr. Ishiba did not give the LDP time to heal the fissures his selection exposed, and left himself little time to draft a coherent election message, even as the opposition opposed on LDP scandals to paint the ruling party as no longer fit for government.

With files from Reuters