The French and Dutch "no" votes on the EU constitution could have serious repercussions for the recruitment sector of the UK economy, the Association of Technology Staffing Companies (ATSCo) has warned.
According to ATSCo, the "no" vote in France and the Netherlands may lead French and Dutch politicians to renegotiate the various EU treaties with a bias against further labour market liberalisation.
This would make it much harder for UK recruitment companies to offer their services in the Euro zone as well as a tightening of employment regulations in the UK.
Ann Swain, chief executive of ATSCo, said French and Dutch rejection of the so-called 'free-market' constitution can be seen as an assertion of old-style continental protectionism.
One possible consequence of this is that the proposed EU Services Directive, which aims to open up Euro zone labour markets to foreign competition, will be ditched, she said.
The directive would have allowed recruitment companies already compliant with UK law to transact business across the rest of the EU without having to comply with complex local regulations.
Swain said: "Our concern is that French and Dutch politicians will now also harden their stance against the UK opt-out of the Working Time Directive and seek to entrench inflexiblities in the labour market still further by pushing for quick adoption of the Agency Workers Directive.
"We hope that the UK government will continue to resist this," he said.
The UK government has pledged to fight changes to the working time and agency workers directives.