BUSINESS groups have reacted with fury to a European vote to restrict working hours which they say could damage small businesses.

MEPs in the European Parliament voted yesterday to end Britain's opt-out of the Working Time Directive.

It means companies will no longer be able to ask staff to work more than 48 hours a week on average.

Gerry Reilly, the vice chairman of the Swindon branch of the Forum of Small Businesses, said: "The FSB is worried about it because being small businesses we need flexibility.

"With the best will in the world MPs don't seem to know what a small business is here the Treasury defines it as an organisation with fewer than 500 employees."

Mr Reilly, an independent financial advisor in Highworth, fear many businesses will be forced into asking staff to work unofficial and unpaid overtime, as they would not be able to breach the 48-hour limit.

There is also the possibility that wage levels would go down in medium-sized businesses if they were forced to take on extra staff to make sure the limits were not breached but still had the same wages budget.

Miles Templeman, director general of the Institute of Directors said: "With Europe facing massive economic challenges from China and India, we should be looking to make our labour markets more flexible."

The Forum for Private Business's chief executive Nick Goulding said: "Labour MEPs have sold British business down the drain. They have rejected sensible and reasoned Government policy. A deletion or amendment of the opt-out would harm the flexibility of Britain's labour market.

"To remain competitive and provide jobs, products and services, Britain's opt-out must remain."

But TUC general secretary Brendan Barber said: "Working more than 48 hours week in, week out, year in, year out is undoubtedly bad for health and productivity. Tired workers are more likely to have accidents and to suffer illness."