January 30, 2019 / 7:17 AM / 3 months ago

Brexit brinkmanship: UK demands a fresh exit deal, EU says: 'non'

* Parliament tells May: renegotiate

* May to seek to replace Irish backstop

* EU tells UK: No new deal

LONDON, Jan 30 (Reuters) - British Prime Minister Theresa May was locked into a collision course with the European Union on Wednesday after lawmakers demanded she renegotiate a Brexit divorce deal that the other members of the bloc said they would not reopen.

Less than two months until the United Kingdom is due by law to leave the EU, investors and allies are trying to gauge where the Brexit crisis will ultimately end up with options including a disorderly Brexit, a delay to Brexit or no Brexit at all.

Two weeks after voting down May’s Brexit deal by the biggest margin in modern British history, parliament demanded she return to Brussels to replace the so-called Irish backstop, an insurance policy that aims to prevent the reintroduction of a hard border between Ireland and Northern Ireland.

“There is limited appetite for such a change in the EU and negotiating it will not be easy,” May told lawmakers who voted 317 votes to 301 to support the plan, which had the backing of influential Conservative lawmaker Graham Brady.

“I agree that we should not leave without a deal. However, simply opposing no deal is not enough to stop it,” May, an initial opponent of Brexit who won the top job in the chaos following the 2016 referendum, said.

In essence, May will try to clinch a last-minute deal by using the implicit threat of a no-deal Brexit from the other 27 members of the EU whose economy is, combined, about six times the size of the United Kingdom’s.

The response from European capitals was blunt.

France, the EU’s second most powerful member, said there could be no renegotiation and demanded a “credible” British proposal. Germany has so far not given a public comment.

European Council President Donald Tusk said the divorce deal was not up for renegotiation.

Sterling, which was traded at $1.3190 before lawmakers voted, fell over a cent and was trading at $1.3080 on Wednesday.

Writing by Guy Faulconbridge; editing by Kate Holton

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