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Daily Briefing: May to Brussels after Brexit setback

LONDON (Reuters) - British PM Theresa May heads to an EU summit today after suffering her first big legislative defeat at home, with 11 pro-European party allies backing a move to require that parliament votes on any Brexit deal before her government can implement it.

Britain's Prime minister Theresa May attends the One Planet Summit at the Seine Musicale center in Boulogne-Billancourt, near Paris, France, December 12, 2017. REUTERS/Benoit Tessier

There are sharp differences of opinion over what this will mean, with some arguing it will help save the UK from an unfavourable EU exit and others fearing it will only encourage the EU to insist on harsher terms. The weakness of both analyses is of course that they can only speculate on what the stance of the 27 other European capitals will be in 15 months time. Perhaps its significance lies more in what it tells us about domestic Westminster politics: this has revealed the emergence of a cross-party bloc willing to face the government down on Brexit and which now could be emboldened to make further challenges.

A new opportunity comes next week with a vote on whether to enshrine in law March 29, 2019, as the date for leaving the EU - something that could make it harder to seek an extension of negotiations if needed. In the meantime, May’s Brussels trip should be something of a formality. She will ask for talks to proceed to the next phase covering the future relationship with the EU; after last week’s agreement on divorce issues her European peers will, barring an upset, accede.

Hard on the heels of the U.S. Federal Reserve's move yesterday to raise interest rates but keep on hold its rate outlook for the coming years, Europe's central banks will today be grappling with the nuance of their own policy. The European Central Bank is likely to bump up some of its economic forecasts and may debate tweaking its pledge to keep money at its current, ultra-easy level, but is ultimately seen reaffirming is policy stance amid decent growth but still-lagging inflation.

As usual it releases its policy decision at 1245 GMT with ECB chief Mario Draghi's news conference at 1330 GMT. Before that, the Bank of England at 1200 GMT is seen confirming a "very gradual" pace of tightening since raising rates for the first time in more than a decade last month. Last week's first-phase deal on Brexit should moreover reinforce its running assumption that the EU exit process will be relatively smooth. Analysts polled by Reuters unanimously expect the Swiss National Bank meanwhile to keep its negative rates on hold as it tries to rein in the Swiss franc, whose strength weighs on the export-led economy.

Finally, the Moscow press corps has Vladimir Putin’s annual news conference today starting at 0900 GMT. This comes after he confirmed his no-surprise candidacy for reelection next year and will be the usual wide-ranging mix of subjects. Last year’s went on for about four hours.

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Editing by Matthew Mpoke Bigg

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