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Government survived a no-confidence vote brought by Labour Party leader Jeremy Corbyn over its handling of Brexit on Wednesday. The decision by lawmakers, who voted 325 in support and 306 against the government, leaves the administration intact with Prime Minister Theresa May at the helm. Following the vote, the U.K. Will return to the predefined Brexit timeline, giving the government until Jan.
21 to present an alternative Brexit deal after May's proposal was voted down in Parliament on Tuesday. The British pound in response briefly bounced higher but retraced its gains to stand little changed at $1.2861. The euro was slightly weaker against sterling, last buying £0.8866. British members of Parliament are beginning to vote in a no-confidence motion against Prime Minister Theresa May's government that was brought by opposition leader Jeremy Corbyn. The vote is not expected to oust the government.
The Conservative and pro-Brexit European Research Group, which was instrumental in bringing a leadership challenge against May in December that ultimately failed, said they would back the government. The Norther Irish Democratic Unionist Party is also expected to back the Tories. Should Parliament express it has no confidence in the government after all, and no other government can gain confidence within 14 days, a general election would have to be called.
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May earlier said when addressing Parliament that having a new general election would be the worst possible option. Stocks and bonds were closed at the time the vote began, and the British pound was little changed at $1.2858. Stocks wobbled on Wednesday, as investors got the first chance to react to a historic defeat for Prime Minister Theresa May's Brexit plan. May was defeated by a much bigger-than-expected 230 votes, and investors will now turn to a motion of no-confidence expected later, which she is expected to survive.
The FTSE 100 index gave up opening gains to dip 0.1% at 6,884.407. Pearsons PLC led the decliners, with a 5.6% drop after the education publisher narrowed its guidance. Oil majors led the losses, with BP PLC S: bp and Royal Dutch Shell Group PLC declining over 1% each. Parliament voted against Prime Minister Theresa May's Brexit deal on Tuesday, leaving Britain with further uncertainty. 432 members of Parliament voted against it, while 202 voted in favor. May's government now has three days to present an alternative plan in Parliament. That said, the opposition Labor Party leader Jeremy Corbyn will bring a vote of no-confidence in the government, which will be debated in Parliament on Wednesday.
If May's government loses the vote, fresh elections would be triggered. The option of a so-called hard Brexit, where the U.K. Crashes out of the European Union without a result, is also still on the table now. The British pound, which was sharply lower versus the U.S.
Dollar ahead of the vote, retraced some of its losses but remained solidly in the red in response to the vote. Sterling last bought $1.2760, down 0.8%, according to FactSet. The euro-sterling pair was meanwhile slightly lower, with one euro buying £0.8909, down 0.1%.