Japanese business leaders have criticised government pressure on banks to waive loans to Tokyo Electric Power, in a rare public confrontation that highlights the problems confronting Japan in the aftermath of the Fukushima nuclear accident.

Yasuchika Hasegawa, chairman of the Japanese Association of Corporate Executives, criticised Yukio Edano, chief government spokesman, for -suggesting last week that the government’s rescue plan for Tepco hinged on banks forgiving loans to the utility.

“We would like the government to avoid making rash comments that affect companies’ earnings and share prices before it has a clear policy,” Mr Hasegawa said on Tuesday, adding that he “cannot help but question how this country’s democracy can be made to work with free-market based capitalism”.