In confirmation that Theresa May's upcoming Florence speech this Friday is not only what many have called "the most important day for Brexit since the referendum", but also the most opaque, the Telegraph reports that UK Foreign Secretary Boris Johnson will resign as before the weekend if Theresa May veers towards a “Swiss-style” arrangement with the EU in her upcoming speech.
The Foreign Secretary believes he will have no option but to walk out of the Cabinet if the Prime Minister advocates permanently paying for access to the single market. Stopped by reporters in New York today after going for a run, Mr Johnson said he was not going to resign and described the Cabinet as "a nest of singing birds".
However, he has reportedly "told friends that a so-called “EEA minus” version of Brexit is something he “could not live with”.
If she tells the Cabinet she has made up her mind in favour of the Swiss-style “EEA minus” option, which would yoke Britain to the EU through payments for single market access and adherence to most EU rules and regulations, Mr Johnson could not support it and would have to resign under the convention of collective Cabinet responsibility.
As a reminder, an "EEA minus" scenario (ie like Switzerland and Norway) is one of several visions for Brexit emerging within the government. One recent sellside observation defines it as follows:
In blunt terms, the Swiss model is outside the EU, but with access to the single market (whilst not being inside it). Britain would shadow the EU’s regulatory structures and transpose European Court of Justice Judgements. They want to negotiate a similar deal for the UK but “minus” the freedom of movement. Curcially though, Switzerland had to concede and give the EU certain Freedom of Movement – the UK wants to get this deal “minus” freedom of movement (hence the name). This proposal supposedly has the backing of Chancellor Hammond, Home Secretary Amber Rudd, Cabinet Secretary Jeremy Heywood and Olly Robbins (who was, until last night, civil service head of the Department for Exiting the European Union).
The "Swiss-style" arrangement is in contrast to a "CETA Plus”, or omprehensive Economic and Trade Agreement, a la Canada, which negotiated a free-trade agreement with the EU which effectively eliminates 98% of tariffs between the two countries, which the EU Commission has said will save the EU over half a billion EUR in taxes each year, and allows “mutual recognition in regulated professions such as architects, accountants and engineers, and easier transfers of company staff and other professionals between the EU and Canada”.
Following the report GBPUSD has jumped about 30 ticks, rising above 1.353, suggesting the the market's vote is, in fact, for EEA minus... and also a "Boris Johnson minus" outcome.