Next year promises to be another tight one for Japan's finances, and for the first time in years, basic research may feel the pinch too.

Last week saw government departments submit their initial budget requests for 2006. As for 2005, the Ministry of Finance is seeking to cut 1.5% from the overall budget — but this time it has suggested that research funding will have to play its part in the cutbacks.

Japan needs to reduce overall government spending because of its huge national debt, which at ¥900 trillion (US$8.2 trillion) amounts to 170% of its gross domestic product. But the government had so far exempted the research budget from cost-cutting, in an effort to boost global competitiveness.

Research, including the main grant system, accounts for a third of Japan's ¥3.6 trillion science and technology budget. Although this budget has been declining gently for the past five years, money for research projects has been growing steadily since 1989. But this year “the overall budget has become tighter”, says Tsuyoshi Maruyama, head of the Science and Technology Policy Bureau at the education ministry, and the finance ministry has suggested a cut of 2–3% to the research budget.

To cope with such constraints, the government wants to prioritize how money allocated for research is spent. It plans to focus on large-scale projects such as space missions and supercomputers, which have lost out in recent years to areas such as nanotechnology and life sciences.

Scaling down: researchers in Japan may have to tighten their belts next year.

Among the big-ticket projects on the education ministry's shopping list for funds is the Global Earth Observation System of Systems. This ten-year international project will create a unified Earth observation system (see Nature 433, 789; 200510.1038/433789a), and the ministry is seeking ¥27.6 billion for Japan's contribution to it next year. Other areas that would benefit under the budget request include the development of advanced proteomics analysis technologies and RNA research.

But many scientists are worried that this new focus on big projects will absorb the lion's share of the money, meaning cuts for other areas. One senior official at the education ministry says he fears that cash for life sciences overall could be cut by about ¥13.5 billion. All of that would come from research projects, he adds, as it is difficult to reduce personnel costs.

Yoshiki Hotta, a biologist and head of the Research Organization of Information and Systems, says he understands the need to streamline costs. But he adds that he is disappointed that the tighter budget meant the education ministry didn't pass on many of his organization's research proposals to the finance ministry. “Even though we want to present new ideas, we can't,” Hotta says. “That will discourage researchers and dampen Japan's science.”

The final decision on the research budget won't be taken until December, and the finance ministry may yet prove to be flexible. It could, for example, allocate science a slice of a ¥100-billion special budget that the government will set aside to finance important policies.