Failed deal spells uncertainty for Brexit and May's long-term survival

The U.K. Parliament has rejected the government’s Brexit plans, in a sweeping 432–202 vote. The development plunges U.K. politics into crisis: While there’s a clear majority against the government’s plans, there’s no evident majority in favor of a specific alternative.

Why it matters: If Parliament cannot agree on what to do next, the U.K. will by default crash out of the EU without a deal. This could do immense damage to the U.K.'s economy, potentially taking as much as a 10.7% hit to the country’s GDP.

Background: For the past 2 years, the U.K. has been negotiating an agreement on the terms of its EU departure, set for March 29 — just 10 weeks from now. Prime Minister Theresa May hoped that a majority of MPs would support her agreement so that Brexit could proceed in an orderly manner, but those hopes have now been dashed.

The government has been defeated by a coalition of opposites: around 120 MPs who want a more clear-cut, “hard” Brexit, and believe that May has compromised too much; and over 300 MPs who think Brexit is a mistake.

The margin of the government’s defeat — far greater than any previous U.K. government's on a major policy — also raises questions about May’s future. In the short term, she should survive.

• A vote of no confidence in the government — proposed by Labour’s leader, Jeremy Corbyn — will be debated on Wednesday, but it’s almost certain to be defeated. The one thing all Conservatives agree on is that they don’t want the general election that a successful vote would entail.
• But in the weeks and months ahead, May’s survival is far less certain.

What’s next: May will return to Parliament next Monday, setting out her plans in the wake of her heavy defeat. She has said that “no deal is better than a bad deal.” It remains to be seen whether she will hold her ground, which would appease the 120 hard-Brexit MPs, or pivot to a softer Brexit to build a cross-party consensus.

What to watch: Whatever May does, Parliament may decide to seize control of the process and assemble a different majority — potentially one that agrees to hold a fresh referendum. The possibility that the U.K. will end up remaining in the EU can no longer be dismissed.

Peter Kellner is a visiting scholar at Carnegie Europe.