European Union leaders have called for a major review of a plan to deregulate services across the 25-nation bloc, in a setback for a bold economic liberalization plan. The development comes at the end of summit in Brussels.
The plan is intended to allow workers from bricklayers to computer specialists to easily market their services across the EU. But after strong resistance from France, the EU summit in Brussels called for amendments to preserve the European social model, meaning protected jobs and wages. Germany, Sweden and others also sought guarantees that reforms would not undercut their welfare systems or damage workers' rights.
Leftist politicians and labor unions strongly opposed the plan saying it would flood the EU with cheap Eastern European labor, costing jobs in Western Europe. But backers of the plan said it would boost the economy by creating jobs and better services.
The summit decision came as polls show French public opinion is against the new European constitution, which faces a vote in May. France is a founding EU member, and analysts say a defeat for the constitution there could send a bad signal, and possibly spark an EU political crisis.
But Luxembourg Prime Minister Jean-Claude Juncker, whose country holds the EU presidency, denied there is a link.
"A simplistic reading implying that the services directive had been examined in such a way in the council in order to be considerably amended just to suit French elections purposes, is an impression you might get. But is not correct," he said.
Services make up 70 percent of the EU economy, and the European Commission says liberalizing this area is the key to economic growth. The EU economy has lagged behind the United States in recent years with only a two percent growth rate and unemployment near nine percent.