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UK parliament defies govt to rule out no-deal Brexit

By Frank Prenesti

Date: Thursday 14 Mar 2019

UK parliament defies govt to rule out no-deal Brexit

(Sharecast News) - UK MPs defied Theresa May and voted to rule out a no-deal Brexit on Wednesday in dramatic scenes, sending the pound climbing higher on Wednesday night.
In a further erosion of the prime minister's authority, an amended government motion was passed by 321 to 278.

May had promised her MPs a free vote, but the final paragraphs of the original version had been worded to explicitly state that a no-deal departure was still the legal default position if an agreement was not struck with the European Union by March 29.

However, an amendment put forward by the Conservative Caroline Spelman to reject a no-deal scenario outright squeezed under the wire by just four votes, meaning the government was then forced to whip MPs against its own motion.

Spelman had actually tried to pull her amendment, but this was overruled by the commons Speaker John Bercow. It was formally put by Labour's Yvette Cooper, a co-signatory.

Rather than vote against the government 11 senior and junior pro-EU ministers defied the whips and abstained from the vote, including Business Secretary Greg Clark, Defence minister Tobias Ellwood, Justice Secretary David Gauke, Business minister Richard Harrington, Scottish Secretary David Mundell and Work and Pensions Secretary Amber Rudd.

MPs also voted to comprehensively defeat the 'Malthouse compromise' amendment, submitted by Damian Green and supported by several Cabinet minister and pro-Brexiters, by 374 to 164. It had called for an extension to both Article 50 and the transition period and for the pursuit of a managed no-deal. It had already been thoroughly rejected by many senior EU figures.

The pound, having been climbing most of the afternoon, took a leg higher following the vote, up 1.4% against the dollar to 1.3256 and up 1% versus the euro to 1.1695.

Despite the spike for sterling the European Commission was blunt in its assessment of Wednesday's outcome, with a spokesman saying no deal was still a default position unless agreement was reached.

"We take note of the votes in the House of Commons this evening. There are only two ways to leave the EU: with or without a deal. The EU is prepared for both. To take no deal off the table, it is not enough to vote against no deal - you have to agree to a deal. We have agreed a deal with the prime minister, and the EU is ready to sign it."

MAY WARNS OF 'LONG DELAY'

A clearly irritated May said no-deal could only be ruled out by an agreement with the EU to extend Article 50 or abandoning Brexit altogether. She said another government motion would be tabled on Thursday setting out future proposals seeking an extension but not beyond June 30.

She warned parliament there could be a "much longer extension" to Article 50 without an agreed deal.

"The House has today provided a clear majority against leaving without a a deal, however I will repeat what I said before," she said in a statement.

"These are about the choices this House faces. The legal default in EU and UK law is that the UK will leave without a deal unless something else is agreed. The onus is now on every one of us in this House to find out what that is.

"Therefore, the house has to understand and accept that, if it is not willing to support a deal in the coming days, and as it is not willing to support leaving without a deal on 29 March, then it is suggesting that there will need to be a much longer extension to Article 50. Such an extension would undoubtedly require the United Kingdom to hold European parliament elections in May 2019."

"I do not think that would be the right outcome. But the house needs to face up to the consequences of the decisions it has taken."

STERLING SETTLES DESPITE 'HEADLESS CHICKEN' MPS

Think Markets chief analyst Naeem Aslam said one-month sterling-dollar volatility had "dropped massively" after the vote.

"Parliament has made it clear that unless there is a deal, they are not ready to leave the EU. Sterling traders are in love with this concept and this pushed the price of sterling higher against the dollar," Aslam said.

"The fact is that it is comforting to know that no deal Brexit scenario is off the table, but at the same time there is no table. This is because May's party is in more disarray and Brexit has become a laughing matter for everyone. Unfortunately, the lawmakers in the UK are like headless chickens with no clue which way to go. This element is going to keep the lid on the sterling price."

"Moreover, the EU has put pressure on the UK by saying that the parliament's vote on no deal Brexit doesn't mean that it wont happen. This particular factor is keeping the cap on the sterling price."

Institute of Directors interim director general Edwin Morgan said MPs "now need to agree on what they want in place of no-deal".

"If they vote for an extension tomorrow there will still be the considerable task of convincing the EU that there is an exit deal the House of Commons can get behind. The EU has made clear they see last night's vote against the Withdrawal Agreement as increasing the risk of a disorderly exit - UK politicians must now prove Brussels wrong."

"After more than two years of repeated disappointments, business leaders once again find themselves at the mercy of politicians, hoping that compromise will finally win out. For far too long the real interests and concerns of employers and their staff have played second fiddle to the political psychodrama that our trading partners and competitors have been watching with bemusement.

"The patience of companies has long since been exhausted. Our politicians just need to get on with it now."

(Reporting by Frank Prenesti and Oliver Haill)

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