Paul O’Connor, Head of Janus Henderson’s UK-based Multi-Asset Team, assesses how sometimes going backwards takes you further forward, as Prime Minister Theresa May secures a rare victory in parliament.

It says a lot about the state of the Brexit process that the best victory the prime minister has achieved in some time was when parliament voted last night to rip up the draft Brexit deal that she has spent more than a year agreeing with the EU.  Mrs May has now been given a mandate to go back to Brussels to renegotiate the withdrawal agreement by attempting to replace its contentious Irish border backstop with ‘alternative agreements’. Within minutes of last night’s vote, the European Council President, Donald Tusk, dismissed this aim as futile, saying that: “The backstop is part of the withdrawal agreement, and the withdrawal agreement is not open for renegotiation."

While it is nevertheless still conceivable that the EU might yet be persuaded to make some adjustments to the backstop, it is unlikely that these will be significant enough to satisfy the 317 MPs who voted for the backstop to be ‘replaced’ last night. Time is an important dimension here as the prime minister said that she would try to renegotiate this deal by 13 February. Should she fail, MPs will have the ability to make further suggestions on how to proceed the day after that – happy Valentine’s Day prime minister. It is hard to avoid the conclusion that last night’s developments will achieve little more than running down the clock; we are likely to be in a similar position in a couple of weeks to where we were before last night’s vote, with a parliament that cannot deliver a majority vote on the Brexit deal on offer nor on any of the other Brexit options, such as no-deal Brexit, delayed Brexit, a general election or a second referendum.

Still, some sort of decision will need to be taken before the end of March deadline has expired. While parliament seems to be struggling to agree on anything, its overall opposition to a no-deal Brexit is one exception. This view was highlighted last night by another motion that received parliamentary support – one that rejected leaving the EU without a withdrawal agreement. While that vote has no legal force, Parliament still has the scope to assert itself more forcefully on 14 February if the government fails to deliver a revised deal that commands broad support. Under these circumstances, we still believe that the most likely outcome is that parliament forces the prime minister to delay Brexit, avoiding a no deal outcome for now but extending the uncertainty for many months into the future.