Theresa May to make last-ditch attempt to push through her Brexit deal on Friday

Key Points
  • A series of votes in the U.K. Parliament shows that political deadlock over Brexit is as strong as ever.
  • None of the eight "indicative votes" received overwhelming backing, but the votes clearly showed a strong opposition to leaving the EU without a deal.
  • Here's the lowdown on what just happened and what could happen next.
BRUSSELS, BELGIUM - NOVEMBER 25: British Prime Minister Theresa May speaks at a press conference after attending a special session of the European Council over Brexit on November 25, 2018 in Brussels, Belgium. 
Sean Gallup | Getty Images News | Getty Images

Prime Minister Theresa May will make a last-ditch attempt to push through her Brexit deal on Friday after a series of votes in the U.K. Parliament showed that political deadlock is as strong as ever. Here's the lowdown on what just happened and what could happen next.

What just happened?

Members of Parliament voted Wednesday night on a range of options put forward by lawmakers on Brexit and what relationship the U.K. should have with the EU once it leaves the bloc. The results showed that there is no majority support for any of the eight alternatives they voted on.

The aletrnatives included leaving the bloc on April 12 without a deal, staying in a customs union with the EU, remaining in a customs union and close alignment with the single market as well as holding a second referendum to confirm the Brexit deal or to stay in the EU instead.

What did the votes show?

None of the nonbinding "indicative votes" received overwhelming backing, but the votes clearly showed a strong opposition to leaving the EU without a deal — seen as a "hard" Brexit option — and a preference among many lawmakers for a closer relationship with the EU post-Brexit.

For instance, 264 MPs voted for a customs union with the EU (to 272 against); 237 voted for the opposition Labour Party's proposal for a customs union plus close alignment with the single market (to 307 against) and 268 voted for a "confirmatory" referendum to approve a Brexit deal or to stay in the EU (with 295 against such a plan).

MPs did not vote on May's Brexit deal, which has already been rejected twice by Parliament.

May told members of her Conservative Party on Wednesday that she would step down if her 'Withdrawal Agreement' – as the Brexit deal is known – were approved in a third vote, which will be held Friday, the original date for the withdrawal.

What does it mean for Brexit?

The lack of clarity following the votes have left many people scratching their heads over what the U.K. actually wants from Brexit, but the votes show that, like the public, MPs remain as divided as ever.

The votes showed a clear dislike for the "no-deal" Brexit option, however, with 400 votes against.

"While none of the eight Brexit options won a majority in the U.K. parliament tonight, the 'indicative votes' nonetheless yielded a few clear insights," Kallum Pickering, senior economist at Berenberg Bank, said in a note Wednesday night after the votes.

"(1) parliament is strongly against a no-deal hard Brexit; (2) so far, there is more support for a softer version of Brexit than Prime Minister Theresa May's semi-soft deal; and (3) the option of a new referendum is not off the table," he wrote.

Pickering noted that a majority of MPs is staunchly against a hard Brexit and that while this remains the default option come April 12 if the U.K. has not passed May's Brexit deal or agreed with the EU a further delay, "the clear result (against a hard Brexit) strengthens our view that, if need be, the U.K. would rather ask for a new Brexit delay than plunge into a hard Brexit."

What happens next?

With no clear consensus on Wednesday night's votes, there is expected to be a second round of nonbinding votes on Monday.

As Pickering noted, "the calculus may change for a significant number of MPs so that a majority in favor of one of the options that almost made it tonight could emerge. 320 votes guarantees a majority in the House of Commons."

May is expected to hold a third "meaningful vote" seeking support for her Brexit deal despite it being defeated twice already in January and March. This vote, known as "MV3" (for the third "Meaningful Vote") could be held Friday, but some reports have cast doubt on that possibility.

However, many MPs (mainly Brexiteers and the Northern Irish Democratic Unionist Party, which supports May's government) still dislike her deal, particularly the part related to the Irish "backstop." This aimed at preventing a hard border between the Republic of Ireland and Northern Ireland but involved maintaining a much closer (and potentially much longer) relationship with the EU.

Long delay, election more likely

Britain has until May 22 to leave the bloc if politicians agree to May's deal, or April 12 if they do not. If Britain wants to stay longer, it will have to participate in European parliamentary elections on May 26.

Faced with the prospect of a delayed departure, some Brexiteers agreed Wednesday to back May's deal if a third vote were held. But it's nowhere near certain that she would get the support the deal needs to get through Parliament, particularly after the DUP said again that it would not support it.

If the deal were passed, May agreed Wednesday that she would leave office. This would mean a leadership contest in the Conservative Party, and the increased likelihood of a general election.

With Brexit unresolved in the meantime, a longer delay to the U.K.'s departure is now what most economists expect. Among them is Paul Donovan, chief economist at UBS Global Wealth Management, who in a note Thursday referred to Brexit as "the interminably tedious UK-EU divorce" and said a "long-delay to the exit seems increasingly likely."

What about the UK economy?

A longer delay to Brexit and a leadership battle means more uncertainty for British businesses that have repeatedly criticized the government for having no clear strategy when it comes to Brexit.

"Brexit is a big deal (for businesses), it's the source of a lot of uncertainty and businesses do not like uncertainty," Mats Persson, U.K. Brexit strategy leader at EY, told CNBC on Thursday. "No one likes this almost permanent state of limbo we're in."

"Underpinning all of that is you have the wider political uncertainty," Persson, a former adviser to previous Prime Minister David Cameron on EU Affairs, told CNBC's Willem Marx.

"The prime minister talking yesterday about her potential departure date throws up the prospect of a potential general election. … So you also have not only the Brexit outcomes you have to think about [as a business], but also the political uncertainty and the potential for changing government," he said.

"It's almost the perfect mix, or rather the perfect storm, in terms of the difficulty of planning for this from a business perspective."