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Lawmakers in the parliament's main elected house voted against the government's motion supporting May's plans to seek last-minute changes to Britain's EU withdrawal agreement.
US President Trump plays down his attack on Britain's Brexit plans, praising PM May's leadership and insisting ties between the two countries "have never been stronger".
The EU has continued taking steps to prepare for life after Brexit, EU lawmakers proposed shrinking the European Parliament from 751 to 705 elected members due to Britain's departure.
Many companies have already drawn contingency plans in case Britain makes an uncontrolled departure from the EU, according to the Confederation of British Industry (CBI), which also attended the meeting with May.
Theresa May has warned the British public to prepare for crashing out of the EU with no deal, setting out emergency plans to avoid border meltdown for businesses and travellers.