THE CBI has warned that the Government must not further erode the Britain's flexible labour market as a report showed it is one of the economy's major strengths.

Digby Jones, CBI director general, said: "This report confirms that the UK's flexible labour markets are key to competitive advantage and a crucial factor when companies decide to invest. This is a jewel in the crown of inward investment and it must be jealously guarded.

"There is absolutely no room for complacency on this issue. The threat is not so much that jobs will go to France and Germany, but to India, China and Brazil."