The CBI has warned ministers that they must not give up key labour powers during this month's negotiations on the European constitution.

The group has set out its "business red lines" - with a warning that the new constitution does little to boost competitiveness but could seriously undermine industrial relations.

Unless ministers win concessions the constitution could be "bad for UK business and UK jobs" the CBI warns.

The CBI has warned ministers that they must not damage British business during what is being described as a "reinterpretation" of labour legislation.

The body's director general, Digby Jones, said: "We fully support the drive for an efficient EU but not at any price. The draft constitution includes serious threats to British business, hidden in a fog of bureaucratic language that leaves so many questions hanging in the air.

"It is imperative that the text is unambiguous and absolutely watertight. We need a treaty that equips Europe to be competitive in a globalised arena.

"As drafted, the constitution could be bad for UK business and UK jobs. We are confident the government understands our concerns but I am worried by what might be bargained away in exhausting late-night negotiations."