The Morning Message

Morning all. More significant earnings releases are due today, with BP and Smith & Nephew reporting.

Yesterday, Reform unveiled its immigration policy, drawing heavily on Australia's historic approach to border control. The policies go well beyond incremental changes, with Reform proposing a new command structure that would see the Royal Navy, intelligence services and police working in closer coordination.

Central to the plan is the proposal to intercept small boats and return migrants to France or Belgium before they reach the UK. Whether such a policy could ever be implemented in practice is likely to depend on the willingness of those two countries to cooperate.

Markets

The Big Story

Reform gets some inspiration from Down Under

Reform's new immigration policy has been announced, and it's heavily inspired by Australia's Operation Sovereign Borders.

Operation Fortress, the party's plan to stop small boats crossing the Channel, borrows much of the Australian approach. It combines changes to UK immigration law with a new operational model, bringing the Royal Navy, Border Force, Coastguard, intelligence services and police under a single command.

In essence, Reform's proposal is to deploy the Royal Navy to intercept small boats in or approaching UK waters, remove those on board and return them to France or Belgium rather than allowing them to reach Britain.

That differs from previous proposals such as the Rwanda scheme, under which migrants would first arrive in the UK before being removed elsewhere for processing. Under Operation Fortress, the aim is that migrants never reach Britain in the first place.

The proposal involves more than simply deploying the Navy. A central feature is the creation of a single command structure designed to coordinate surveillance, interceptions and returns across multiple agencies, mirroring one of the defining features of Australia's Operation Sovereign Borders.

Whether Britain could successfully replicate the Australian model is another question. Australia's approach relied on cooperation with neighbouring countries and a broader system of deterrence, offshore processing and changes to the law. Any British version would likely depend heavily on how France and Belgium responded to the return of migrants intercepted in the Channel.

The Boardroom

AstraZeneca considering Bristol Myers

Pharmaceutical companies are a bit like Hollywood studios. Success depends on finding the next blockbuster before the current one reaches the end of its commercial run.

That might help explain why pharma giant AstraZeneca is considering a takeover of Bristol Myers. News of the potential deal surfaced over the weekend, with a figure of around $400 billion being widely reported.

Firms like AstraZeneca face the commercial pressure of building a development pipeline before the patents on their existing drugs run out. When exclusivity falls away, other manufacturers can produce generic versions of the same thing at a much lower price, meaning companies are under constant pressure to find their next line of medicines.

In this instance, while AstraZeneca faces the prospect of a few blockbuster drugs like Farxiga coming up for expiry, it's actually Bristol Myers that is facing the more severe patent cliff. Drugs such as Eliquis (a blood thinner) are coming up for expiry, making it increasingly important for Bristol Myers to replace those revenues.

AstraZeneca was approached by Pfizer in 2014, although the takeover bid was rejected over price and amid concerns about UK job losses. Twelve years on, the roles have reversed. AstraZeneca is now considering whether a company facing a much steeper patent cliff could strengthen its own pipeline for the future.

The Take

The timing of Reform's new immigration policy is understandable, but the proposal goes beyond simply tightening existing rules.

It comes as Labour recovers in the polls and migration has once again become a political talking point in Europe, with Spain and Italy publicly clashing over the recent crossings into Ceuta.

Where previous UK proposals have largely focused on what happens after migrants reach Britain, whether through offshore processing in Rwanda or by making settlement less attractive, Operation Fortress seeks to prevent migrants ever arriving. In some respects, Reform is not simply proposing to protect Britain's border; it is proposing to push it further out into the English Channel.

The policy also goes beyond deploying the Royal Navy. One of its more striking features is the proposal to place the Navy, Border Force, Coastguard, intelligence agencies and police under a single operational command, borrowing heavily from Australia's Operation Sovereign Borders.

Whether such an approach could work in Britain is another matter. Much would depend on Royal Navy capacity, the legal implications of their plans and, perhaps most importantly, whether France and Belgium are prepared to accept the return of migrants intercepted at sea.

Whatever the political arguments, the proposal reflects a broader shift in the debate. Rather than focusing on how Britain should deal with migrants once they arrive, the emphasis is increasingly moving towards whether they should be allowed to reach British soil in the first place.

Before You Go

And that's us.

Until tomorrow,
Sean