For the second time the government has suffered a heavy parliamentary defeat on PM May’s Brexit deal, with the meaningful vote seeing 391 against and 242 for. While the margin of the defeat at 149 is far smaller than the 230 votes seen back in January, it is still large enough to leave any hopes of it gaining the requisite support before March 29th hanging in tatters. This now sets into motion a sequence of events that will likely see the the UK return to Brussels and seek an extension to Article 50 beyond the 29th March deadline.
Given that almost two months after the first vote was comprehensively rejected there has been pretty scant progress made, this suggests that it will take more than a small tweak on this deal to gain the support required to passed. Assuming the house vote against a no-deal tomorrow, as is widely expected, this ultimately means that a softer version of May’s deal, possibly along the lines of a Norway model, may be pursued - or even a 2nd referendum.
This defeat does not come at all as a shock and was widely expected after the legal advice of AG Geoffrey Cox earlier and therefore the market reaction has not actually been to severe. The pound remains firmly lower on the day but has not broken down further in response to the vote.