The long-anticipated vote on the prime minister’s Brexit deal ended in a government defeat of 432 votes to 202. Find out what the government’s next steps might be, and how the uncertainty may affect the markets.

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How will the Commons vote affect the markets?

With Theresa May’s withdrawal agreement being defeated by 432 to 202, representing the most significant defeat of a government bill in the history of the Commons, there is likely to be widespread volatility in the markets in the days and weeks ahead.

However, the prime minister survived a vote of no confidence in the government on 16 January by 19 votes, and will now have until Monday 21 January to put forward a ‘plan B’. Depending on how this plan is received, stability and certainty could return to the markets.

Markets to watch during Brexit

Markets Bid Offer Change
FTSE 100
FTSE Mid 250
Germany 30
Goldman Sachs Group Inc (All Sessions)
HSBC Holdings PLC - ADR
UBS Group AG (US)
Spot Gold

Prices above are subject to our website terms and conditions. Prices are indicative only. All shares prices are delayed by at least 15 mins.


As ever in times of uncertainty, investors look to gold.

After experiencing a spike following the initial referendum in June 2016, gold’s price has largely settled over the last few years.

That is not to say that it couldn’t spike again, especially given the uncertainty surrounding the next steps for the UK’s departure.


Sterling fell against the euro after the referendum result was announced. However, the EUR/GBP pair maintained a steady rate of between lows of 0.87 and highs of 0.90 from December 2017 to the beginning of January 2019. Immediately following the defeat of the government’s departure agreement on 15 January, the pound entered a strong recovery. Whether this will be maintained in the coming days and weeks remains to be seen, making this a key pair to watch.


The effect on shares since the Brexit referendum has been mixed. Some companies have benefitted from a weaker pound and improved economic outlook, and others have struggled. For the most part, the FTSE 100 has grown since June 2016, but the effects of Brexit as far as individual securities are concerned have varied. A possible outcome of the defeat of Theresa May’s deal could be a no-deal Brexit, which would likely have a catastrophic effect on companies that export their goods to the EU.


The FTSE 100 and FTSE 250 both rose over the course of 2017, thanks to weak sterling performance and an improving UK economy. However, in 2018 both were volatile as a result of sell-offs on global equity markets, and the increasing uncertainty surrounding Brexit negotiations and the proposed deal. The trading relationship with Europe is critical to many firms’ future earnings, so indices are very likely to be affected by the final Brexit agreement, whatever that might be.

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Brexit: what are the options?

Now that her deal has been rejected, the prime minister has until Monday 21 January to put forward her plan of action.


The most likely course of action for the prime minister will probably be to attempt to get last-minute concessions from Brussels on the Irish backstop – the most contentious part of her draft withdrawal agreement. If she succeeds, she could bring her plan back to the Commons for another vote.

Another possible scenario is an extension of article 50, which would mean that Britain would not leave the EU on 29 March 2019, but at a later date. This would give the government more time to renegotiate a new and final withdrawal agreement. However, while it is clear that this could be the only way to get a majority of MPs on the government’s side, it is not yet clear whether other EU leaders have the appetite for such talks.

Revoking article 50

The European Court of Justice (ECJ) has ruled that the UK could stop Brexit, and remain in the EU, by revoking article 50. The UK can do this without the consent of other EU nations, meaning that the decision to do so remains entirely at the UK’s discretion.

For now, the prime minister has ruled this scenario out, stating that it would be going against the will of the people who voted to leave in the 2016 referendum. However, support for this option could grow stronger now that the deal has been rejected and the future for Britain’s departure appears uncertain.

Second referendum

The option of a second referendum on EU membership has been gaining popularity since the initial result was revealed – in part due to claims that the leave campaign misled voters. The People’s Vote campaign is also campaigning for a national vote on the final agreement with the EU, something which the prime minister has also ruled out.

There are several options for the ballot paper, including an ultimatum between accepting the prime minister’s deal or remaining in the EU. Another option is the one proposed by Jo Johnson and Justine Greening – a three-way vote between May’s eventual deal, no deal, and remaining in the EU.

No-deal departure

Arguably, the most disagreeable scenario for both the UK and the EU would be no-deal – a ‘hard Brexit’. This would create significant uncertainty and could result in a drop in both the pound and the euro. The negotiation period that has been ongoing for the last two years is a representation of both sides’ attempts to avoid a no-deal Brexit.

It would mean that the UK would leave the EU with no special arrangements for trade, customs, travel or citizens’ rights in place. It is likely that the British economy would suffer, while the rights of EU workers in the UK and of UK workers in the EU would be uncertain.

When will Brexit happen?

The current date for the UK to leave the EU is 29 March 2019 and it reflects a deadline for the negotiation phase to be completed, and for the transition phase to begin. Under the current plan, as of December 2020, the transition period will be over, and the UK will have left the EU.

Whether this deadline will be honoured in light of the defeat of the prime minister’s deal and the looming departure date will become evident in due course.

What's happened in the Brexit timeline so far?

The result

The referendum held in 2016 saw over 30 million people turn up to vote. The split was 51.9% in favour to leave, 48.1% in favour of remain.

There was a significant regional variation in the vote: London, Scotland and Northern Ireland all backed remain, while England and Wales opted to leave, with 53.4% and 52.5% of the vote respectively. All in all, the vote revealed a deeply divided Britain: a fact which defined the following months of negotiations, challenges and reprisals.

The result took the government by surprise. David Cameron resigned from number 10, and was replaced by Theresa May following a leadership contest within the Conservative Party. She confirmed that the UK would leave the EU with her famous ‘Brexit means Brexit’ soundbite, despite being in favour of remain before the result was announced.

Triggering article 50

Article 50 was triggered on 29 March 2017, starting the official two-year countdown to Brexit. What followed was a period of planning by EU and UK negotiators, lasting until June 2017 when negotiations began. In the interim, Theresa May called a snap election, hoping to boost the Tory’s parliamentary majority and strengthen the government’s bargaining power with EU leaders.

The plan backfired spectacularly, as the Conservatives lost their majority and were forced to form a coalition with the Democratic Unionist Party (DUP). Some argue this has weakened the government’s position considerably, as ratification of the final deal will require the backing of the DUP in parliament.

Brexit negotiations

Negotiations officially began on 19 June 2017, with the UK accepting a phased negotiation timeline suggested by Michel Barnier, the EU’s chief negotiator. Phase one concluded in December 2017, with agreements in place regarding a financial settlement of between £35-39 billion, a soft Irish border, as well as the rights of UK and EU citizens living cross-border.

Phase two ran until mid-November 2018 and focused on the future relationship between the UK and the EU. As part of this phase of negotiations, a transition period of 21 months was provisionally agreed, which is scheduled to start immediately after the leave date. This will give time for the UK to negotiate its future trading relationship with the EU.

The Chequers deal and a provisional agreement

The ‘Chequers plan’ – published on 12 July 2018 – was one of the most substantial and most complete plans for Britain’s exit from the EU at the time. It set out the relationship that the UK would seek with the EU following its departure from the union.

Although being approved by the British cabinet, the plan was rejected by the EU, with Michel Barnier, the EU’s chief negotiator, citing that the integrity of the EU single market is not negotiable and that the UK cannot ‘cherry pick’ the parts of the single market it likes. The single market is reliant on ‘four freedoms’: the free movement of goods, people, services and capital. The Chequers agreement only made concessions for the free movement of goods, which prompted Barnier’s comments.

The major sticking point was how the border between Northern Ireland and Ireland would work in practice, particularly if the two sides were unable to agree a workable trade deal during the transition phase. This is because the EU is unable to accept a soft border with a country that has different customs arrangements.

In November 2018, the two sides agreed a deal which would see the UK as a whole remain in a joint ‘customs territory’ with the EU until an alternative trade deal could be reached. However, it remains to be seen if Theresa May can win a commons’ majority for this deal, with critics claiming that such an arrangement will hand control of the UK’s trade to a foreign power.

Theresa May’s draft deal and cabinet’s approval

After many months of negotiation, Theresa May finally put a draft deal – a successor to the failed Chequers agreement – to her cabinet in November 2018. The new deal represented a step towards a soft Brexit, as it detailed a plan for trade during the transition period, the Irish border, the rights of UK and EU citizens.

The prime minister declared that the cabinet had accepted her deal ‘collectively’ following around five hours of discussions on 14 November 2018. However, this terminology implied that the decision was not unanimous, with reports later suggesting that up to ten ministers had offered criticism of the prime minister’s plan – particularly the Irish backstop. Several cabinet members resigned immediately, including Brexit Secretary Dominic Raab. Many other MPs also expressed concerns over the proposed deal.

On 25 November 2018, a summit of EU leaders agreed to the prime minister’s deal. After the announcement, European Commission President Jean-Claude Juncker stated that the decision was ‘not a moment of jubilation but a moment of deep sadness’ in light of Britain’s seemingly solidified departure.

Delayed Commons vote

On 10 December 2018, one day before the House of Commons was set to vote on the prime minister’s deal, Theresa May decided to postpone the vote in lieu of serious opposition from both sides of the aisle and speculation the deal would be rejected by the House.

The prime minister promised to return to Brussels to seek assurances from EU leaders on certain aspects of her deal – particularly with regard to clarification on the Irish backstop and whether the UK would be tied indefinitely to a customs union with the EU.

Vote of confidence in Theresa May

On 12 December, a vote of confidence in Theresa May was brought forward by her own party. The vote saw 117 Conservative MPs move against her, but she prevailed with 200 voting in her favour. Now, the prime minster is exempt from challenges from within her own party until December 2019, but her government could still face a motion of no confidence from the House of Commons, should a majority of MPs back the idea.

Defeat of Theresa May’s deal

Following the delay of the first vote, a second vote was scheduled for 15 January 2019. The prime minister’s deal was historically defeated by 432 votes to 202 in the Commons, as had been expected at the time of the first scheduled vote. Her deal included plans for the rights of UK citizens living in the EU and EU citizens living in the UK, as well as for the transition period, a divorce settlement of £39 billion, and a contentious plan for the Irish border.

Many MPs said that the prime minister’s draft agreement was simply a bad deal and that they could not in good conscience give it their support. As a result of the thumping defeat, Jeremy Corbyn triggered a vote of no confidence in the government, scheduled for 16 January 2019. What will happen in the coming days and weeks depends on whether the government survives the vote, and whether there can be some form of renegotiation on the deal.

Vote of no confidence in the government

Theresa May survived a vote of no confidence in her government on 16 January 2019. The result was 325 to 306, a closer margin than was expected. The DUP were key to her victory as had the 10 DUP members of parliament rebelled, it is likely that the government would have lost the vote.

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1 For forex based on number of primary relationships with FX traders (Investment Trends UK Leveraged Trading Report released August 2018).

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