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May Survives No-Confidence Vote As Brexit Deadline Nears: 'Unfortunately, Everything Remains Possible'

May Survives No-Confidence Vote As Brexit Deadline Nears: 'Unfortunately, Everything Remains Possible'

Investors and businesses were digesting the latest developments in the U.K’s stumble toward an exit from the European Union with as much uncertainty as the nation itself has about how, when or if it will actually occur. 

Britain’s FTSE 100 was down — but not dramatically — on Wednesday following the defeat of Prime Minister Theresa May’s Brexit plan the day before.

May narrowly survived a no-confidence vote in Parliament Wednesday, 325-306, and immediately invited leaders of the other major British parties to work with her on talks for a new Brexit deal. A new plan was expected to be presented to Parliament by early next week.

The British pound quickly rebounded from a Tuesday sell-off. 

Britain is scheduled to leave the European Union March 29 — at least for now.

'Unfortunately, Everything Remains Possible'

“There’s still quite a lot of uncertainty,” UBS Global Wealth Management analyst Caroline Simmons told Reuters. “A hard exit is a lower probability risk than it was, but I don’t think we can completely discount it.”

With Parliament rejecting May’s plan for how the country would carry out the voter-ordered Brexit, possibilities floated Wednesday for what’s next, including a hasty reworking of the plan; a request for an extension on the exit, which many EU members oppose; and even another referendum in Britain, where voters said by a 52-48-percent margin in 2016 that they wanted out of the organization of European nations. 

Another dramatic possibility arose Wednesday when The Times of London reported European Union officials were investigating whether Brexit could be postponed until 2020. 

“Unfortunately, everything remains possible,” DWS Chief Investment Officer Stefan Kreuzkamp told Reuters.

British Automakers Worry About 'Irreversible Damage' 

Some analysts said the uncertainty could drive some U.K. investors to other markets.

"Outside the U.K., the country is a laughing stock and an embarrassment, which is encouraging investors and fund managers to view the U.K. as a bit of a basket case for now," Shore Capital Markets analyst Clive Black said on Sky TV News.

Leaving the EU without a deal spelling out details and how trade would work between the U.K. and the continent would be “catastrophic,” according to the Society of Motor Manufacturers and Traders, which represents the British auto industry.

“Leaving the EU, our biggest and most important trading partner, without a deal and without a transition period to cushion the blow would put this sector and jobs at immediate risk,” SMMT Chief Executive Mike Hawes said in a statement.

“‘No deal’ must be avoided at all costs. Business needs certainty so we now need politicians to do everything to prevent irreversible damage to this vital sector.”

What’s Next?

A Parliamentary committee has published a report laying out options following the defeat of the deal May negotiated.

May is expected to present a “plan B” to Parliament by Monday, the Financial Times reported.

The Parliament report lays out four possibilities: hold another vote on May’s deal; leave the EU with no deal on March 29; seek to re-negotiate the deal with Europe, though all 27 EU members would have to go along with that, and it’s not thought to be likely they would; or hold a new referendum to let the people decide what kind of Brexit they want, or whether they want to remain in the European Union.

Related Links:

Theresa May's Brexit Plan Defeated in Parliament, Leaving Government Up In The Air

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