New Model Adviser - For professional financial planners

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

May crashes to historic defeat as MPs shred Brexit plan

MPs rejected Theresa May’s Brexit deal by a historic margin of 230 votes, with a significant number of her own party defying Conservative whips.

May crashes to historic defeat as MPs shred Brexit plan

MPs have rejected Theresa May’s Brexit deal by a historic margin of 230 votes, with a significant number of her own party defying Conservative whips as they signalled their deep divisions over Brexit.

Parliament split 202 by 432 in opposition to the plan, which alienated Tory Brexiteers by handing the EU a veto over the UK’s exit in assurances on the free flow of goods across the Irish border.

Labour leader Jeremy Corbyn immediately announced he would table a vote of no confidence in the the government, which has been scheduled for debate today. The vote will be held at 7 p.m. 

The DUP, which casts the swing vote in the house, released a statement saying it would support the government, making a successful challenge to May unlikely.

In a statement to Parliament, May said: 'It is clear that the house does not support this deal. But tonight’s vote tells us nothing about what it does support. Nothing about how – or even if – it intends to honour the decision the British people took in a referendum parliament decided to hold.

'First, we need to confirm whether this government still enjoys the confidence of the house. I believe that it does, but given the scale and importance of tonight’s vote, it is right that others have the chance to test that question if they wish to do so.

'Second, if the house confirms its confidence in this government, I will then hold meetings with my colleagues, our confidence and supply partner the DUP, and senior parliamentarians from across the house to identify what would be required to secure the backing of the house.'

An informal projection by The Guardian had earlier put the scale of the loss at 213 votes, while Sky counted 225 opposed, with bookmakers putting the rebels at between 200 and 250

Of the votes opposed, 118 were cast by Tory backbenchers, according to a BBC tally.

Bookies had quoted odds of 20-to-one against the probability of a win for May, who, before Christmas, had pulled a scheduled vote on the terms of the deal as the scale of opposition became clear.

While the defeat was universally recognised as near-inevitable, the path ahead remains almost impossible to guess, with May refusing to inform leaky cabinet members of her planning and less than three months remaining before the UK is scheduled to leave the EU.  

Number 10 promised to return ‘quickly’ to inform Parliament of its plans. The Guardian reported that Olly Robbins, the lead civil servant dealing with Brexit, had drawn up six contingency plans, including staying within a customs union, but excluding a second referendum.   

Some idea of the way ahead was earlier hinted at by German foreign minister Heiko Maas, who said he doubted ‘very much’ whether there was much room for revision on the deal, but added ‘if it goes wrong tonight, there could be further talks’.

However, French foreign minister Nathalie Loiseau had last week said it was ‘up to the British parliament’ to find consensus. ‘It’s not up to us – we have given everything we can give.'

The largest prior parliamentary defeat by a sitting government was the 166 vote loss suffered by Ramsay Macdonald’s minority Labour administration in 1924. Post-war, the largest losses were all chalked up by Jim Callaghan’s government in the late 1970s, with the widest margin at 89 votes.  

May’s cabinet allies had earlier gone to bat for the deal, with environment secretary Michael Gove saying that a rejection of the deal would invite a second referendum and that MPs would have an opportunity to amend its terms

The Labour leadership on Monday told its MPs that it would push for a vote of no confidence in May. However, that appears unlikely to be endorsed by the Conservative and DUP members required to pass, setting the stage for a long-deferred fight between the Eurosceptic party leadership and the overwhelming majority of party members in favour of a second referendum.

Sterling, which has rallied from an early 2017 low of $1.24 to $1.28 since late December as MPs sought to block a hard Brexit, had earlier been largely unchanged, while the FTSE 100 traded inline with global markets, up 0.3%.

Speaking to Reuters last week, hedge fund manager and leading Brexiteer Crispin Odey admitted that he was now actively positioning his funds in expectation that Brexit would be cancelled and that sterling ‘looks like it could be quite strong’.

He predicted that the pound could rally by as much as 5.4% to a nine-month high of $1.35 if MPs put the brakes on Brexit. ‘My view is that [Brexit] ain’t going to happen,’ he said. ‘I just can’t see how it happens with that configuration of parliament’.

However, Dean Turner, UK economist at UBS Wealth Management, reccomended clients continued to avoid large bets on the UK economy.

'UK assets will continue to be vulnerable to the political volatility and we don’t expect this will subside until a concrete conclusion emerges,' he said.

'We do not advocate investors take directional views on sterling, gilts or UK stocks while this clarity void remains so large. Within existing portfolios, investors would be wise to limit any UK exposure at benchmark levels.'

Share this story

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
More Content
7277.73 + 47 0.65% 04:35
More Content

Related Fund Managers

Crispin Odey
Crispin Odey
205/206 in Equity - Europe (Performance over 3 years) Average Total Return: 15.34%
More Content

BUSINESS

Adviser Profile: Nicky Wright and Barry Greening of Clear Financial Advice

Adviser Profile: Nicky Wright and Barry Greening of Clear Financial Advice

Nicky Wright has helped Barry Greening overcome personal adversity to transform Clear Financial Advice into a firm that makes the most of its employees’ varied skills

ADVICE

22 Comments Active Wealth (UK) collapse leaves £500k PI mystery

Active Wealth (UK) collapse leaves £500k PI mystery

Our investigation into the collapse of a firm at the centre of the British Steel pension transfer scandal reveals significant holes in the professional indemnity insurance system

twitter_banner

INVESTMENT