U.K. lawmakers rejected Prime Minister Theresa May's proposed Brexit deal in a 432-202 vote, giving May until early next week to come up with another plan, with the March 29 Brexit date just weeks away.
Following the result, which has fueled further uncertainty in the British political arena, May said she will present a new draft motion by Jan. 21 aimed at winning parliamentary support. Other possible scenarios ahead of the vote included crashing out of the European Union without a deal, a delayed Brexit, and a second referendum.
May's defeat in the House of Commons' so-called meaningful vote was widely expected, with markets focusing more on the margin. The voting marked the biggest parliamentary defeat for a government in more than a century.
Sterling tumbled 1.10% against the dollar around 7:40 pm London time, when the result was announced, but pared losses to trade virtually unchanged against the dollar by 8:22 pm.
"It is clear that the House does not support this deal. But tonight's vote tells us nothing about what it does support," May said immediately after the vote, adding that she intends to deliver Brexit, in line with the British people's will.
Labour Party leader Jeremy Corbyn, who wants to force early elections, proposed a no-confidence motion against the government, which will be voted on Jan. 16. This is different from the December 2018 no-confidence vote, which challenged May's position as the leader of the Conservative Party. May survived that vote, meaning she is safe from another leadership challenge for 12 months.
Getting a Brexit deal done allows for a transition period until the end of 2020. Ahead of the meaningful vote, May warned Jan. 14 that a no-deal Brexit meant leaving the EU without a transition period, security cooperation with the EU, guarantees for U.K. citizens overseas and certainty for businesses.
"The risk of a disorderly withdrawal of the United Kingdom has increased with this evening's vote," Jean-Claude Juncker, president of the European Commission, said. "While we do not want this to happen, the European Commission will continue its contingency work to help ensure the EU is fully prepared."
The parliamentary vote, originally scheduled for December 2018, was postponed by May amid "widespread and deep concern" over a backstop solution for the border between Northern Ireland and the Republic of Ireland. In an attempt to help bolster May's position, the EU had provided assurance that the Irish backstop plan would only be used temporarily, if at all.
The Bank of England warned in November 2018 that U.K. GDP could fall by as much as 10.5% over a five-year period in a no- deal Brexit scenario.
The U.K.'s FTSE 100 closed 0.58% higher Jan. 15.