U.K. Parliament rejects May's Brexit plans despite last-ditch efforts to save deal

British lawmakers crushed PrimeMinister Theresa May's European Union divorce deal on Tuesday,thrusting Britain deeper into crisis and forcing Parliament todecide within days whether to back a no-deal Brexit or seek alast-minute delay.

Lawmakers voted against May's amended Brexit deal 391 to242 as her last-minute talks with EU chiefs on Monday to assuageher critics' concerns proved fruitless.

The vote puts the world's fifth largest economy in unchartedterritory with no obvious way forward; exiting the EU without adeal, delaying the March 29 divorce date, a snap election oreven another referendum are all now possible.

May might even try a third time to get parliamentary supportin the hope that hardline euroskeptic lawmakers in herConservative Party, the most vocal critics of her withdrawaltreaty, might change their minds if it becomes more likely thatBritain might stay in the EU after all.

While she lost, the margin of defeat was smaller than therecord 230-vote loss her deal suffered in January.

Lawmakers will vote at 3 p.m. ET on Wednesday on whetherBritain should quit the world's biggest trading bloc without adeal, a scenario that business leaders warn would bring chaos tomarkets and supply chains, and other critics say could causeshortages of food and medicines.

May said the government would not instruct her party'slawmakers how to vote, as would normally be the case.

An opposition Labour Party spokesman said this meant she had"given up any pretence of leading the country." May's politicalspokesman said she had not discussed resigning.

Risk of no-deal Brexit 'increased significantly'

The prime minister, hoarse after Monday's late-night talks,told lawmakers: "Let me be clear. Voting against leaving withouta deal and for an extension does not solve the problems weface."

She said Parliament is at an impasse: "Does it wish torevoke Article 50 [announcing the intention to leave the EU]? Doesit want to hold a second referendum? Or does it want to leavewith a deal, but not this deal?"

The European Union said the risk of a damaging no-dealBrexit has "increased significantly" but there would be no more
negotiations with London on the divorce terms.

Sterling, which had earlier in the day fallen by two per cent to $1.74 Cdn,was trading at around $1.75 Cdn shortly after the vote.

The pound is likely to weaken further amid prolongeduncertainty, said Andrew Wilson of Goldman Sachs AssetManagement. "That said, ruling out of a 'no-deal' Brexit couldprovide some support for the currency."

'There will be no third chance'

Opposition to May's deal among members of the ConservativeParty derives from a belief that it does not offer the cleanbreak from the European Union that many voted for.

However, Parliament is expected firmly to reject a no-dealBrexit as well, so lawmakers would then vote again on Thursday on whether government should request a delay to the leaving dateto allow further talks.

Both May and the EU have already ruled out any other changesto the deal, struck after two-and-a-half years of tortuousnegotiations.

"There will be no third chance," European CommissionPresident Jean-Claude Juncker said on Monday. "There will be nofurther interpretations of the interpretations, no furtherassurances of the reassurances if the 'meaningful vote' tomorrowfails."

Parliament to decidelength of delay requested

The government had been expected to offer Parliament thechance to press for a short extension, but announced on Tuesdaynight that it would be for Parliament to decide on the length ofthe delay that the government would request.

This raised the possibility that it might ask to push theexit date past late May, when Britain would have to participatein European Parliament elections a prospect that both sideshave been keen to avoid.

Britons voted by 52-48 per cent in 2016 to leave the EU butthe decision has not only divided the main parties but alsoexposed deep rifts in British society, bringingto the fore concerns aboutimmigration and globalization.

Many fear that Brexit will divide the West as it grappleswith both the unconventional U.S. presidency of Donald Trump andgrowing assertiveness from Russia and China, leaving Britaineconomically weaker and with its security capabilities depleted.

Supporters say it allows Britain to control immigration andtake advantage of global opportunities, striking new trade dealswith the U.S. and others while keeping closelinks to the EU, which, even without Britain, would be a single market of 440 million people.