London (AFP) - Britain's finance minister and business chiefs on Wednesday urged the country to avoid a "no deal" Brexit after another crushing parliamentary defeat for Prime Minister Theresa May over her EU-divorce deal with Brussels.
The fast-moving Brexit saga largely overshadowed the government's budget update that slashed the 2019 economic growth forecast, with the UK economy also hit by China's slowdown and trade war tensions.
MPs will decide later Wednesday whether the country should leave the European Union without a deal, with analysts expecting parliament instead to favour delaying its departure beyond the March 29 exit date, in a further vote due Thursday.
Britain's economy is expected to expand by 1.2 percent this year, assuming there is an orderly EU exit, finance minister Phillip Hammond revealed in his budget update on Wednesday. That was sharply down from prior guidance of 1.6 percent.
The sizeable downgrade, widely expected after a similar move by the Bank of England, came one day after parliament overwhelmingly rejected May's draft Brexit divorce agreement.
- 'Cloud of uncertainty' -
"Last night's vote leaves a cloud of uncertainty hanging over our economy and ... our most urgent task in this House is to lift that uncertainty," Chancellor of the Exchequer Hammond said in a budget thin on policy announcements.
"Leaving with 'no deal' would mean significant disruption in the short and medium term, and a smaller, less prosperous economy in the long term than if we leave with a deal -- higher unemployment, lower wages, higher prices in the shops.
"That is not what the British people voted for in June 2016" in the referendum to leave the EU.
The chancellor also warned the "spectre" of uncertainty was "damaging our standing and reputation in the world".
Earlier, Carolyn Fairbairn, director-general of Britain's biggest employers' organisation, the Confederation of British Industry, slammed politicians' handling of Brexit.
"It's time for parliament to stop this circus," said Fairbairn after MPs rejected May's divorce deal for the second time.
May needed to extend the Article 50 deadline for withdrawal from the bloc to allow sufficient time for an acceptable deal, she added.
"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."
Catherine McGuinness, policy chief for the City of London financial district, warned British business was now "staring down the precipice".
"Politicians of every hue must overcome their differences and make avoiding a no-deal Brexit the absolute priority," she urged.
And the British Chambers of Commerce (BCC), which represents thousands of firms, also insisted that a "no deal" exit had to be avoided.
They too voiced anger that politicians were still grappling with implementation of the 2016 referendum result, issuing a stinging rebuke to Hammond's Conservative party, traditionally regarded as a big supporter of private enterprise.
"The government must now urgently set out in concrete terms what it will do to avoid the damage that a messy and disorderly exit on March 29 would cause to businesses, communities, and the UK economy," the BCC said.
- Zero-tariffs -
In a bid to soothe nerves, May's government on Wednesday said it would temporarily slash most import tariffs in the event of a "no deal" Brexit.
Britain also vowed not to apply customs checks on the border with Ireland, albeit temporarily.
The new tariffs regime is aimed at avoiding both a jump in prices of EU imports for consumers and any disruption of supply chains. It is intended to last up to one year pending negotiations on a more permanent system.
Under the proposal, 87 percent of imports into Britain will be eligible for zero tariffs, compares with the current level of 80 percent.
But the tariffs pledge also drew an angry response from business leaders.
"These are being imposed on this country with no consultation with business with no time to prepare," added Fairbairn.
And the BCC lambasted the "abrupt" move as an "unwelcome shock" for many businesses.
In the auto sector, the government said carmakers reliant on EU supply chains would not face tariffs for imported parts used to make vehicles in Britain.
However, UK car industry body, the Society of Motor Manufacturers and Traders, responded that a "no deal" would spark disruption and job losses in a sector already plagued by collapsing demand for high-polluting diesel vehicles.
Japanese carmakers Honda and Nissan have both recently decided to slash investment in Britain.