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The European Union’s new leadership team on Monday vowed to force the pace on the contentious issue of liberalising the EU’s services market, with a surprise pledge to seek a political deal by June.

The new Austrian presidency of the EU and the European Commission said it was vital to get a speedy agreement on the draft services directive to prove the Union was serious about boosting growth and jobs.

José Manuel Barroso, European Commission president, surprised his Austrian hosts by announcing he hoped to present a compromise package to an EU economic summit in Brussels in March. Wolfgang Schüssel, Austrian chancellor, replied: “I hope during the Austrian presidency we can present a successful solution.”

The EU services directive has become the focal point of divisions between economic liberals and those seeking to preserve the continent’s social model. Tabled by the Commission two years ago, the draft law seeks to dismantle the many barriers holding back companies from offering their services in other EU countries.

It would give businesses the right to open a subsidiary in other member states without going through lengthy, complex and discriminatory authorisation procedures. More controversially, the original Commission proposal also includes a “country-of-origin principle”, which says companies can offer services around the EU provided they follow the laws of their home country.

Supporters of the plans argue that freeing up the services market, which accounts for two-thirds of economic activity in the EU, would boost employment and productivity. But critics say it would undermine working conditions in richer EU states, lead to job losses and let low-cost service providers from eastern Europe undercut their rivals in countries such as Germany, France and Austria.

The draft directive has drawn vigorous opposition from trade unions, as well as from several EU capitals. Austria’s centre-right government, which faces general elections this year, is among the countries hoping to water down the directive.

Mr Schüssel said he wanted to involve “social partners” – employers and trade union leaders – in seeking a “balanced” outcome in the services debate.

But Mr Barroso made clear he would fight to ensure the final legislative deal was “ambitious”, warning that the EU’s promise to raise economic growth and employment was “not serious” unless there was an agreement soon.

The European parliament is expected to approve the draft law in a closely watched vote next month.

Copyright The Financial Times Limited 2017. All rights reserved.

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