MPs considered seven amendments to the withdrawal bill last night, of which only two won support. One, which is not binding on the government, was tabled by Labour’s Jack Dromey and the Conservative Caroline Spelman, saying they would not accept a no deal outcome.

The other, put forward by the senior Conservative Graham Brady, promised to replace the Irish backstop with unspecified ‘alternative arrangements’.

In a statement immediately after the Brady amendment passed, May, said: ‘Tonight a majority of honourable members have said they would support a deal with changes to the backstop.

Combined with measures to address concerns over Parliament’s role in the negotiation of the future relationship and commitments on workers’ rights, in law where need be, it is now clear that there is a route that can secure a substantial and sustainable majority in this House for leaving the EU with a deal.

‘We will now take this mandate forward and seek to obtain legally binding changes to the withdrawal agreement that deal with concerns on the backstop while guaranteeing no return to a hard border between Northern Ireland and Ireland. My colleagues and I will talk to the EU about how we address the House’s views.’

However, Carolyn Fairbairn, CBI director-general, labelled the outcome as a ‘deeply frustrating day for British business’.

‘The never-ending parliamentary process limps on while the economic impact of no deal planning accelerates.

‘The Brady amendment feels like a throw-of-the-dice. It won’t be worth the paper it is written on if it cannot be negotiated with the EU. Any renegotiation must happen quickly – succeed or fail fast.

‘Firms will welcome confirmation that a majority of MPs oppose a no deal outcome. But rejecting a no deal doesn’t get a deal. Until MPs can agree a solution, delay will do nothing to lift the threat of an economic cliff edge that is draining money from the UK,’ Brady said.

Stephen Martin, director general of the Institute of Directors, said: ‘While it is something that MPs have managed to form a majority in any vote, the path ahead is still far from clear. The prime minister clearly faces a difficult task in winning a compromise on the backstop.

‘However, if the choice is between trying to change the deal and leaving without one, business will have to hope the EU can be flexible and consider whether any legal changes at all could further clarify that the backstop is not a permanent fixture.’

Martin warned that as 29 March remains the deadline for the UK to exit, and with no clear agreement published, an increasing number of firms are activating contingency plans, many of which involve moving business out of the UK.

‘Much more information on what would happen on day one of no deal is needed to ensure any adequate level of business readiness. We still don’t know what the UK’s applied tariffs or full changes to customs processes would be, and there is virtually no guidance on planning for firms in Northern Ireland.

‘The Prime Minister’s commitment to a second meaningful vote in a fortnight is helpful in the face of these pressing timescales. The PM must go one step further, however, and set out now in clear terms what would happen if this second vote is lost. Business leaders need to know whether that would mark the point of no return for leaving without a deal,’ he said.

Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said: ‘We must see pragmatism from the EU and UK Government in finding a new centre of consensus for a new deal that can pass the House of Commons, before the Brexit clock runs out.

‘Tonight has seen a small but significant step that shows Parliament falling into line with the UK small business community, which is a small relief. However, we cannot lose sight of the reality that we are still no closer to securing a pro-business deal before 29th March.’

The European Parliament's chief Brexit negotiator, Guy Verhofstadt, said on Tuesday night that there was ‘no majority to re-open or dilute’ the withdrawal agreement, although he welcomed Parliament's decision to reject a no-deal.

Ahead of the vote, James Stewart, head of Brexit at KPMG, had reported that many businesses were  ‘praying for an extension to Article 50.’

‘At this stage even our most informed clients feel as if anything could happen. They’re thinking about getting products from A to B, market access, and staffing up situation rooms for April. Forecasting the outcome of Brexit is a bit like trying to predict a greyhound race, there are no safe bets,’ he said.

Report by Pat Sweet