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RE: So Whose Right of Way Would That Be Then?
It looks very likely that Red had the right of way. If someone is driving through the middle between parked cars (both sides, space only for one), you should wait for them to pass before going in yourself.
It's possible Grey hatchback entered first but I'm assuming Red did due to being further in.
I have a dashcam on my car. Whatever happens, I'll have video evidence. I wonder if you had that in a circumstance like this, you could stand your ground briefly, if they bully you, back down then take them to court with video evidence later.
Nice move with the dashcam, bro! It'll come in real handy when on the London streets. And yes, being further in as you say, I think that car is at fault too. But honestly, the fact that neither car wanted to back down, was plain ridiculous. Some people just got too much time on their hands...