Measures which would have made it easier for companies to work across the European Union have been rejected today in a move branded protectionist by Conservative MEP Daniel Dalton. He said the internal market committee's decision exposed politicians who claimed to support the internal market but then voted to restrict competition.

Mr Dalton, the Conservative's Internal Market spokesman, said: "Today the goal of opening up the internal market for services has been set back years. The report was backed by Europe's businesses, particularly small and medium sized firms, and would have helped consumers access a wider variety of services. Yet some MEPs chose narrow protectionism over a freer market. I was particularly disappointed to see British Labour and UKIP MEPs joining forces to help defeat sensible proposals that would have considerably reduced red tape for UK companies. In recent years we have made good progress in establishing a single market in goods but not nearly enough in services. Today the stalling continued."

Under the draft laws companies wishing to provide their services in another EU country would have been able to complete administrative formalities in their own country and language. While they would still have needed to adhere to local laws, such as labour rules, the so-called e-card aimed to reduce much of the bureaucracy that comes with offering services in another Member State. Construction was expected to be one of sectors to benefit most from the reforms.