The House of Commons today rejected British Prime Minister Theresa May's Brexit plan by a crushing margin.

May lost the vote 432 to 202, making it the biggest defeat since 1924.

As news of the defeat reverberated through the UK business community, there were concerns about the impact this might have on the market.

Market pundits told the Telegraph in the UK that they did not anticipate an immediate swing in the market but that there would likely be "fireworks" as the nature of Brexit becomes apparent in the coming days, weeks and months.

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British Prime Minister Theresa May suffered a resounding defeat in the House of Commons today. Photo/Getty Images.
British Prime Minister Theresa May suffered a resounding defeat in the House of Commons today. Photo/Getty Images.

The Pound Sterling fell 0.2 per cent to $1.2839 after declining as much as 1.5 per cent earlier. The Telegraph said analysts had suggested beforehand that a margin of defeat above 100 votes would be negative for the currency.

While this is a relatively mild response, there is likely more to come.

"The fireworks will happen after today - when it is clear what happens next," one pundit told the Telegraph.

Business leaders have expressed frustration at how the Brexit plan is being dragged on due to a lack of consensus between politicians.

"It is the collective failure of our political leaders that, with only a few weeks to go, we are staring down the barrel of no deal," said Institute of directors in a statement.

It is not clear if it will push the British government toward an abrupt "no-deal" break with the EU, nudge it toward a softer departure, trigger a new election or pave the way for a second referendum that could reverse Britain's decision to leave.

The biggest concern to market watchers is a chaotic departure from the bloc.

The defeat of May in the House of Commons has escalated the ongoing leadership tensions in the UK.

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The business community is frustrated by the ongoing saga. Photo/Getty Images.
The business community is frustrated by the ongoing saga. Photo/Getty Images.

May said the government will "listen" and said she would fight a no-confidence tomorrow - effectively daring Jeremy Corbyn to call one. He immediately accepted, saying the government had reached the "end of the line".

The vote means further turmoil only 10 weeks before the country is due to leave the EU on March 29.

Impact on the New Zealand dollar

The kiwi stuck to a tight range ahead of the Brexit vote in the UK, helped by new China stimulus and a solid overnight milk auction.

The kiwi was trading at 68.06 US cents at 8am in Wellington, versus 68.38 cents at 5pm yesterday. The trade-weighted index was at 73.66 from 73.78.

After the vote, the local currency remained steady at around 68 cents.

The NZX 50, the index of New Zealand's 5 biggest stocks, appeared unfazed in the immediate aftermath of the vote, lifting 0.19 per cent.

As was indicated by the UK commentary, there could, however, be a sharper impact once the next steps are unveiled in coming weeks.

Last year showed that New Zealand remains sensitive to Brexit uncertainty, with market moving consistently in response to news out of the UK.

In November, following a 0.2 per cent drop in the NZX50, Bryon Burke, head of equities at Craigs Investment Partners, said Brexit is getting a lot of attention in local media.

"It may not have immediate impacts on New Zealand but it does have big implications for Europe and will ultimately affect all markets," he said.

"I'm guessing the Asians don't think about it that much, but it does affect money flows around the world."