The Pope’s visit to the Canary Islands this week is a study in contrasts. On one side, the spiritual leader of 1.3 billion Catholics offers solace. On the other, the UK Coastguard reports record migrant rescues in the Atlantic, a stark reminder that the real price of this humanitarian flow is measured in pounds, pence and political capital.
Let us be clear: the Canary Islands have become the new frontier of Europe’s migration crisis. The numbers are staggering. In the first six months of this year, the UK Coastguard alone rescued over 10,000 souls from the briny deep. That is a 40% increase on the same period last year. Each rescue costs the taxpayer an estimated £5,000. Do the maths. That is £50 million from the public purse before we even consider the cost of processing, housing and eventual integration or repatriation. This is not charity. This is a balance sheet.
The market, as ever, is signalling unease. The gilt yield on 10-year UK government debt has ticked up 15 basis points this week. The market is pricing in higher future spending, and it does not like what it sees. Investors are not heartless. They simply require a premium for uncertainty. And there is nothing more uncertain than a migration policy that amounts to little more than a lifeboat service.
The Pope’s presence adds a moral dimension that the markets cannot quantify. But the Treasury can. The Home Office has already diverted £200 million from other border security projects to cover the surge. That is money not spent on digital customs checks or port infrastructure. It is money that could have boosted productivity. Instead, it is being consumed by a crisis that shows no sign of abating.
Meanwhile, capital flight is a real risk. The pound has weakened 2% against the euro this month. Foreign direct investment decisions are being delayed. I have spoken to fund managers who are quietly moving assets into Swiss francs and Singapore dollars. They cite “regulatory unpredictability” and “fiscal drift”. They do not mention the Pope or the Canary Islands, but the connection is clear. When a state spends beyond its means on emergency responses, the bond vigilantes take note.
Let us be blunt. The UK Coastguard is doing a heroic job. But heroism is not a strategy. The government must answer a simple question: how much is it willing to pay to deter illegal migration versus how much to rescue those in distress? The current approach is the worst of both worlds: high expenditure, no deterrent effect. The Pope can bless the boats, but he cannot balance the books.
In the City, we have a saying: “A crisis is a terrible thing to waste.” The tragedy off the coast of the Canaries is precisely that. It is an opportunity for fiscal reform. A carbon tax on shipping, perhaps, to fund a proper coastguard. A bilateral deal with Spain to share the burden. Anything but the current open-chequebook approach.
In summary, the Pope’s visit is a moral landmark, but the financial landscape is shifting. Inflation expectations are rising. The Bank of England will have to keep rates higher for longer. And the real price of compassion is a yield curve that steepens by the day.
