UK business groups and trade unions have clashed once again over limiting employees to a 48-hour week, after the EU threatened to end Britain’s opt-out from the Working Time Directive (WTD).

Although the EU said that it would not immediately abolish the UK’s opt-out from the 48-hour week, it suggested that Britain should gradually fall into line with the rest of Europe and adopt the policy.

Business groups have warned that small firms would suffer a damaging drop in productivity and profits if employees were restricted to working no more 48 hours a week.

The Confederation of British Industry (CBI) said that it would fight “tooth and nail” to protect UK employees’ right to work as many hours as they like.

John Cridland, deputy director-general of the CBI, said that firms will be encouraged that the EU has not closed down the option of keeping the opt-out, which is “critical” to the economy.

“Business fully accepts its responsibility to do all possible to ensure people are genuinely choosing to work long hours and that any abuses are stamped out. Indeed, we have already offered proposals to the UK government to address this issue.

“But we will fight tooth and nail against the proposal to gradually remove the opt-out.

“We will also be telling the Commission that collective agreements are not widespread in the UK so making the op-out subject to them is simply a non-starter,” he said.

But the Trades Union Congress (TUC), which has firmly supported the UK’s adoption of the WTD, said that the EU had delivered a “defeat” to the British government, which supports the retention of the opt-out.

Union bosses have repeatedly called for the UK to end its opt-out, claiming that employees’ health was being damaged by long hours and that bosses were forcing staff to sign away their rates to 48-hour weeks.

Brendan Barber, general secretary of the TUC, said: “Today’s Commission decision is a defeat for the UK government who have been arguing that the opt-out should simply stay.

“The Commission has clearly seen through the misleading evidence provided by the UK government. This is great encouragement to our campaign to end the individual opt-out, the only way to stop employers pressuring staff to work long hours.”