MPs move to block no-deal Brexit as Parliament fails to agree

Labour’s Yvette Cooper published a proposed bill – formally known as European Union (Withdrawal) (No.5) Bill – which has cross-party backing, including colleague Hilary Benn and from Tories Oliver Letwin and Dominic Grieve.

If passed, the bill would force the government to seek an extension of Article 50, thereby avoiding a no-deal exit.

She tweeted: “We are now in dangerous situation. Risk of damaging no deal on 12 April rising fast. Whatever is/isn’t agreed this wk, PM must put forward plan for extension to avert no deal.”

She added that her cross-party bill sought to ensure that happened “for the sake of jobs, families and security”. According to Sky News and The Guardian, Letwin was looking to bring the bill before the house on Thursday.

However, there was no guarantee that the bill would be passed, with Letwin himself commenting: “This is a last-ditch attempt to prevent our country being exposed to the risks inherent in a no-deal exit. We realise this is difficult. But it is definitely worth trying.”

Overnight, the House of Commons held another round of indicative votes on the UK’s scheduled departure from the EU. But none of the four options – quitting without a deal on 12 April, remaining in the Customs Union, a so-called Common Market 2.0, and putting any deal back to the public – were passed.

With Parliament now at an apparent deadlock, the cabinet spent the morning discussing options without civil servants present, in a so-called political cabinet meeting. It reconvened after lunch for a full cabinet meeting.

Meanwhile, the EU’s chief negotiator Michael Barnier said a no-deal exit was now more likely. He noted that it could still be avoided, but that a long extension beyond next week would require “strong justification” because it would have “significant risks for the EU”.

And cabinet secretary Mark Sedwill, the head of the civil service, warned in a letter that was leaked to the Daily Mail that there would be dire consequences if the UK crashed out without a deal on 12 April. He argued that the country would become less safe and fall into recession, while food prices could go up by 10%.

At 1600 BST, the pound was down 0.5% against the dollar at 1.3033 and 0.3% versus the euro at 1.1653.

With 10 days until the 12 April deadline, market analyst Craig Erlam at Oanda noted that no-deal was an option MPs strongly oppose - "so the most likely option is a long extension, something I’m sure the public won’t be thrilled about".

He said the that the inability of MPs to get behind anything was not rattling traders though, with the pound remaining volatile but still not heading south: "If that happens, it would suggest the prospect of no deal has dramatically increased, which some are claiming it already has. If this is true then traders confidence in it being avoided may have left the pound very vulnerable."

Currency analyst Jane Foley at Rabobank said GBP, which has remained well supported this year, there appeared to be a "bias in the market towards the expectation that a soft Brexit will be agreed" which leaves the pound exposed to bad news.

If there was a no-deal Brexit, she sees a risk of the pound plunging to the $1.15 area.

"Assuming that a deal is struck, we would expect a relief rally on the pound that could lift GBP/USD towards 1.34 on a 3 month view. However, the next few months are likely to be marred by uncertainty surrounding a UK leadership challenge and potentially an early general election, whilst the next two years are likely to be dominated by negotiations about the shape of the UK’s future arrangement with the UK. This could limit enthusiasm for GBP medium-term."