Britain's Prime Minister Theresa May said parliament faced 'unenviable choices' after it voted down the Brexit deal

London (AFP) - Britain’s Brexit crisis deepened on Wednesday as business leaders warned the country was “staring down the precipice” after MPs overwhelmingly rejected a draft divorce agreement.

In a vote later on Wednesday, MPs are expected to vote against leaving the bloc without a deal but it remains the default option unless an alternative can be secured by March 29, the scheduled Brexit date.

If they reject “no deal”, MPs will vote Thursday on whether to ask the European Union for a delay – but Brussels said it would have to be clear what London wanted from this postponement.

“Why would we prolong the negotiation? To do what?” EU chief negotiator Michel Barnier told the European Parliament in Strasbourg.

Addressing MPs ahead of the 1900 GMT vote, May, her voice still hoarse from a cold, expressed frustration at their refusal to accept her deal.

She said there were “hard choices” about what would come next as Britain prepares to sever 46 years of ties with the EU, its closest trading partner.

Unveiling his latest budget update ahead of the vote, Finance Minister Philip Hammond spoke of a new deal in parliament, in comments that observers quickly interpreted as an endorsement of a softer Brexit strategy.

“Tonight, we have a choice. We can remove the threat of an imminent no-deal exit hanging over our economy,” he said.

“Tomorrow, we will have the opportunity to start to map out a way forward towards building a consensus across this House for a deal we can collectively support, to exit the EU in an orderly way.”

In Berlin, German Chancellor Angela Merkel said: “Achieving an orderly exit together, and I particularly want to repeat this today, remains in our mutual interest.”

- ‘Rudderless government’ -

If MPs vote to delay Brexit on Thursday, EU leaders have said they will consider the idea, but they must unanimously agree.

Barnier warned it was now for Britain to set out what it wants to do.

A packed British parliament on Tuesday voted against Theresa May's Brexit deal, meaning the house must now vote on whether to crash out of the EU without any deal

“It’s the question that must be answered even before any decision on an extension,” he said.

A group of MPs in May’s Conservative party have put forward an alternative proposal to delay Brexit until May 22 and strike a series of interim agreements with the EU lasting until 2021.

The prime minister said Tuesday this was not realistic, noting the EU has repeatedly said its deal is the only one on the table.

However, May will allow MPs to vote as they wish on Wednesday night, in what commentators saw as a further sign of how little control she now has over the Brexit process.

“This is a rudderless government in the face of a huge national crisis,” opposition Labour leader Jeremy Corbyn said.

- ‘Stop this circus’ -

The rejection of the Brexit deal sent the pound tumbling and Britain and other EU countries focused their minds on the prospect of messy divorce.

May’s government announced plans to scrap tariffs on 87 percent of imports and stop applying customs checks on the border with Ireland in the event of “no deal”.

The temporary plan is aimed at avoiding a jump in prices of EU imports and a disruption of supply chains immediately after Britain’s departure.

But Catherine McGuinness, policy chief for the City of London financial district, said British business was now “staring down the precipice”.

A series of votes will determine the course of Brexit

“Politicians of every hue must overcome their differences and make avoiding a no-deal Brexit the absolute priority,” she said.

Carolyn Fairbairn, director-general of Britain’s biggest employers’ organisation, the Confederation of British Industry, said: “It’s time for parliament to stop this circus”.

“A new approach is needed by all parties. Jobs and livelihoods depend on it. Extending Article 50 to close the door on a March no-deal is now urgent.”

MPs first rejected the Brexit deal in January by a historic margin of 230 votes. Though some eurosceptics changed their minds, Tuesday’s defeat was still by a hefty 149.

Brexit supporters believe the deal would trap Britain in the EU indefinitely through the so-called “backstop” plan for the Irish border.

Many pro-Europeans meanwhile are holding out for the possibility that they could yet still reverse Brexit through a second referendum.