The pound fell against the euro and dollar on Friday after Theresa May’s Brexit deal was rejected by parliament for a third time and the EU warned a no deal Brexit is now “likely.”
MPs voted for a third time on Friday on whether to approve the withdrawal agreement negotiated with the EU. As expected, the deal was defeated by a margin of 58.
Sterling was down 0.4% against the euro (GBPEUR=X) to €1.15 and down by 0.3% against the dollar (GBPUSD=X) to $1.29 in the immediate aftermath of the vote. The pound was flat against the euro and up 0.1% against the dollar ahead of the vote.
It came as the EU warned that Britain was now likely to crash out of the bloc with no deal on April 12.
The European Commission said in a statement responding to the vote: “The Commission regrets the negative vote in the House of Commons today.
“A “no-deal” scenario on 12 April is now a likely scenario. The EU has been preparing for this since December 2017 and is now fully prepared for a “no-deal” scenario at midnight on 12 April. The EU will remain united. The benefits of the Withdrawal Agreement, including a transition period, will in no circumstances be replicated in a “no-deal” scenario. Sectoral mini-deals are not an option.”
May warned after her deal was rejected that there is not enough time for an alternative deal to be ratified and pass through parliament. The UK will likely now ask the EU for a further extension to the Brexit timeline although there is no guarantee it will be granted as it would mean the UK would have to take part in European parliamentary elections in May.
“This now makes the nightmare of a “no-deal” scenario more likely than ever,” Stephen Phipson, CEO of Make UK, the manufacturers’ organisation, said in response to Friday’s vote. “This would be a disaster for the UK economy as a whole and for the 2.7 million manufacturing jobs around the UK.”
Mike Cherry, the chairman of the Federation of Small Businesses (FSB), said in a statement: “On the day that we were supposed to be leaving the European Union, all we have is yet another political failure to chalk up.
“Responsibility for this deepening political crisis lies squarely at the feet of politicians who have clearly stopped listening to the business community.”