The European Commission on Wednesday agreed to water down proposals to open up Europe's market in services in an attempt to defuse the political row about the issue. José Manuel Barroso, European Commission president, told colleagues the services directive was politically and technically unworkable, and that itneeded serious revision.

Mr Barroso has ordered Commission officials a decision described as “very unusual” to help dismantle parts of the directive, to quell opposition from France, Germany and the European parliament.