Brexit news latest: What does the Government's defeat in the House of Lords on the Customs Union mean?

The House of Lords inflicted a serious defeat on Theresa May's government on Wednesday night, voting against her plans for Britain to leave the Customs Union.

The vote - which could yet be overturned by MPs - forced through an amendment demanding ministers report on the possibility of a continued customs union between the UK and the EU post-Brexit.

The vote means ministers will have to report what efforts they have made to secure a Customs Union deal by the end of October.

Mrs May has previously insisted the UK will leave both the EU's Single Market and Customs Union in March 2019.

The Customs Union lays down rules throughout the EU (as well as a few non-member regions, such as Turkey and Andorra) on import and export tariffs.

This means rates are fixed throughout Europe. For example, Germany could not suddenly undercut the French economy by offering discount rates to China or the US.

The Customs Union is different to the Single Market, which deals with trade between member states - covering free movement of people, labour etc.

The Customs Union deals with everything outside the EU, the Single Market with everything inside.

Those who support leaving the Customs Union say it will give the UK complete freedom in deciding business regulation and allow greater trading opportunities outside of the EU.

Those who wish to remain believe jobs and British economic prosperity are better protected by the Customs Union's apparently proven security and stability.

Since February, the Labour position has been that Britain should negotiate its position within a new customs union distinct to the existing one.

However Conservative peer Nigel Lawson claimed on Wednesday that any kind of customs union arrangement would leave Britain in a "quasi-colonial" status, a common position among Brexiteers.

Despite the defeat in the Lords, it is possible the House of Commons could overrule the amendment.

However, as Theresa May enjoys a slim majority of just 13 MPs (assuming the DUP continues to back her), her Brexit strategy could be seriously thrown off course.

Hypothetically, assuming all Opposition MPs voted in favour of the amendment, it would take just seven Conservative rebels to force the changes through.

A hair-raising precedent was set in December, when 11 Tories rebelled over Parliament's right to a vote on the final Brexit deal - resulting in a devastating government defeat.

Parliament has yet to vote through the trade bill, the customs bill, and the withdrawal agreement and implementation bill, providing the UK and the EU actually reach a Brexit deal.

Despite Britain's planned departure date of March 29, Mrs May has a number of hurdles to jump in the next 11 months.