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May suffers defeat, focus temporarily on UK inflation

Theresa May is facing a fight for her premiership after losing the meaningful vote on her Brexit deal last night.

Centtrip: UK to welcome new PM

Theresa May and her government have suffered the biggest defeat since 1924 as 202 Members of Parliament voted for and 432 MPs rejected the UK Prime Minister’s divorce agreement.

Immediately after the landslide loss opposition leader Jeremy Corbyn tabled a motion of no confidence in May, which is due to take place tonight at 19:00 (GMT). Two-thirds of Parliament have to vote against May to oust her, however she is likely to survive it after the Democratic Unionist Party (DUP) and Tory Brexiteers offered their support.

What happens next?

Sterling dropped immediately after the results of the vote were announced but recovered quickly as it became clear that either Brexit could be delayed or a second referendum could now be a more likely option. It is expected that 100 Labour Party MPs will today announce their support for the latter.

Time is running out to agree a Brexit withdrawal deal. May has until Monday, 21 January to return to Parliament with an alternative Brexit plan. The Labour Party is demanding to agree to a permanent customs union and to remove the Irish backstop from the deal.

What is EU saying?

Meanwhile, the European side offered no concessions. French President Emmanuel Macron has earlier made it clear the European Union will not renegotiate the deal, saying, “We already went as far as we could.”

Focus today turns to UK inflation data due to be released at 09:30. The figures are expected to show a drop in the Consumer Price Index (CPI) to 2.1 per cent, bringing inflation closer to the Bank of England’s (BoE) 2 per cent target rate. With the BoE lagging behind other central banks, the drop in inflation could weigh on the Pound and would remove the appetite to raise interest rates in the near term.

Mark Carney, the chair of the BoE’s Monetary Policy Committee, is scheduled to speak on the Financial Stability Report, which sets out the view on the stability of the UK financial system, today at 09:15.

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