MEPs vote to open services market

Architects are among those who will be able to work more easily abroad

The European Parliament has approved a law boosting competition in services, which is widely seen as one of the most important EU directives for a decade.

The Services Directive makes it easier for caterers, software companies, plumbers and other service providers to do business across European borders.

The law was at first opposed by some EU member states, afraid of being undercut by countries with lower labour costs.

However, they passed a version of it in May and MEPs have now backed it too.

The European Parliament amended the directive at its first reading in February, to exclude a range of services, from healthcare to temping agencies.

'Ultra-liberal'

MEPs also removed the controversial "country of origin" principle, which would have allowed businesses to operate in another member state under the rules of their home country.

Ministers from the member states are expected to give the directive their final blessing in December, paving the way for it to come into force in 2010.

For business, it's just the beginning Unice Secretary General Philippe de Buck Q&A: Services directive

The EU has long backed the principle of free movement of services, but has failed so far to make it a reality.

The services sector accounts for 70% of all wealth and jobs generated in the EU, and supporters of the directive say it could add 30bn euros (£20bn) to the bloc's GDP and create up to 600,000 new jobs.

The European Commission's original directive, known as the Bolkestein Directive after the Dutch commissioner who drafted it - or sometimes the Frankenstein directive - has been watered down in three years' of debate.

The European employers' lobby group, Unice, said it was still looking for tougher action.

"For business, it's just the beginning," said secretary general Philippe de Buck.

However, the directive is still regarded as ultra-liberal in some quarters, and it faced a last-minute challenge from hard left and Green MEPs.

Others say the wording is so vague, that the courts will ultimately be left to determine the directive's impact.

History

"The directive is perhaps liberalising half the market," said the head of the Liberal group in the parliament, Graham Watson.

We are here today making internal market history Finnish Industry Minister Mauri Pekkarinen

But Internal Market commissioner Charlie McCreevy told MEPs that even the version of the directive on the table would provide "real added value to the internal market by cutting red tape, removing barriers and improving legal certainty for business and consumers".

Finnish Industry Minister Mauri Pekkarinen, whose country holds the EU's rotating presidency, said: "We are here today making internal market history."

UK Trade Minister Ian McCartney said the directive was good news for both businesses and consumers.

"We will now have a Europe where businesses and entrepreneurs can tap into new markets without facing a mountain of unnecessary rules and regulations," he said.

The Institute of Directors said it was important to ensure that all EU member states dismantled regulatory barriers.

'We will be working with the Government to ensure that business gets the fullest possible value from this important legislation," said the Institute's head of public affairs, James Walsh.