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Business groups urge MPs to avoid no-deal after PM's Brexit defeat

Business groups have urged MPs to avoid a no-deal Brexit after the prime minister suffered a further Commons defeat.

The CBI called for politicians on all sides to “stop this circus” while the City of London Corporation said the country was now “staring down the precipice”.

Opponents of Theresa May’s Brexit deal defeated it by 149 votes a day after she claimed victory as she hailed legally binding new changes to backstop arrangements with the European Union.

The pound, which had initially rallied sharply following Mrs May’s last-ditch Strasbourg talks, fell sharply on Tuesday as it became clear she had not done enough to secure a Commons victory.

But it later partly recovered as speculation turned to the prospect of an extended Brexit deadline.

A British one pound sterling coin, a one euro coin and a US quarter dollar coin are arranged and photographed in central London on October 5, 2017
Image: The pound hit a 22-month high against the euro on Monday

CBI director-general Carolyn Fairbairn called for Conservatives to ditch their “red lines” and Labour to show “genuine commitment” in the search for an end to the impasse in parliament.

“A new approach is needed by all parties,” she said. “Jobs and livelihoods depend on it.

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“It’s time for parliament to stop this circus.”

The car industry – already beset by warnings over the threat of a no-deal – also sounded a fresh alarm.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the latest vote “leaves us perilously close to the ‘cliff edge'”.

He added: “No-deal would be catastrophic for the automotive industry.

“It would end frictionless trade, add billions to the cost of manufacturing and cost jobs.

“UK automotive businesses will be put at immediate risk.

“Parliament must reject no-deal and take it permanently off the table.”

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Brexit is most immediate worry for car makers

Catherine McGuiness, policy chair at the City of London Corporation, said businesses now faced “continued economic uncertainty at a critical juncture”.

She said: “We are now staring down the precipice.

“Politicians of every hue must overcome their differences and make avoiding a no-deal Brexit the absolute priority.”

The build-up to the latest vote saw a rollercoaster ride for sterling beginning on Monday night as the prime minister headed for Strasbourg, lifting hopes of a breakthrough on currency markets.

After details of the EU’s concessions emerged, it climbed close to $ 1.33 against the US dollar and hit a 22-month high versus the euro, at nearly €1.18.

But the gains evaporated after Tuesday’s legal opinion from Attorney General Geoffrey Cox on the backstop – an insurance policy designed to prevent a hard border with Ireland that Brexit supporters fear will leave the UK still tied to EU rules.

He said that despite the changes secured by Mrs May, the risk remained unchanged that the UK could not exit the backstop unilaterally.

That prompted investors to bet the PM’s deal stood little chance of getting through the Commons, sending it close to $ 1.30, though it later recovered to nearly $ 1.31.

Against the euro, sterling fell below €1.16, though also subsequently see-sawed up and down.

Traders are now weighing the prospects for the currency as MPs prepare for a vote on a no-deal scenario on Wednesday.

Ranko Berich, head of market analysis at Monex Europe, said: “For now markets remain convinced that parliament will act to rule out exiting with no deal – and Wednesday’s vote is likely to confirm this assumption.”

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