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Switzerland's knife-edge decision to curb immigration from the EU raises major problems, heavyweight Germany warned Monday, as Swiss authorities moved to limit the damage to ties with the 28-nation bloc.
As both sides mulled the fallout from Sunday's referendum in which 50.3 percent of voters decided to void a pact giving equal footing to European Union citizens in the Swiss labour market, Germany said resolving the issue would be an uphill task.
Steffen Seibert, spokesman for German Chancellor Angela Merkel, said Berlin respected the result.
But it "raises considerable problems", he added, noting that Merkel had repeatedly emphasised that free movement was a "prized asset" for Germany.
Viviane Reding, deputy chief of the EU's executive, said Switzerland could not expect to keep the benefits of free trade without accepting freedom of movement.
"That is not possible. You take them all or you leave them all," Reding said.
Europe's economic powerhouse Germany is the top trade partner of neighbouring Switzerland, which is not a member of the European Union.
Germans have also been major beneficiaries of the full opening of the Swiss labour market to EU citizens since 2007.
Switzerland is home to a 284,200-strong German immigrant community, the second-largest after Italians.
On Sunday, German Finance Minister Wolfgang Schaeuble warned that the result "is going to create plenty of problems for Switzerland in a host of areas".
Swiss Foreign Minister Didier Burkhalter was scheduled to make Germany his first stop on a Europe-wide diplomatic drive to explain the vote and seek a solution.
French Foreign Minister Laurent Fabius said "we will review our relations with Switzerland".
But the EU is also facing internal dissent over its own borderless labour market -- notably the westward movement of east European workers -- and traditionally sceptic Britain said the Swiss vote was a lesson.
"What this does reflect is that there is growing concern around the impact that free movement can have," said British Prime Minister David Cameron's spokesman.
Boost for far-right parties
The vote has also been seen as a boost for anti-EU parties, including the far right, within the bloc ahead of European Parliament elections in May.
As an alternative to EU membership, staunchly independent Switzerland in 1999 signed a raft of deals with the bloc.
They were approved by the public in a referendum in 2000 and then phased in. An extension of the freedom of movement rules to cover the EU's ex-communist member states was even backed by Swiss voters in 2009.
But the mood has shifted.
While Switzerland has long had a sizable foreign population, over recent years the proportion has climbed from one-fifth to roughly a quarter.
The right-wing populist Swiss People's Party that crafted the referendum proposal argued that with 80,000 EU citizens arriving per year -- more than the 8,000 predicted before the rules were liberalised -- the nation of eight million needed to apply the brakes.
It also spotlighted the 280,000 people who live in neighbouring countries and cross the border daily to their jobs.
The party blamed supposedly excessive migration for ills including undercutting Swiss workers' salaries, driving up rents, stretching the health and education systems, and overloading the road and rail networks.
'Potentially serious consequences'
But the government and business opposed the immigration plan, saying that Switzerland's robust, low-unemployment economy and ageing population needs a stream of foreign workers, and that reviving past quotas on their numbers would be pointlessly bureaucratic.
Burkhalter played down talk of a "Black Sunday" in ties with Brussels.
"We need to avoid that kind of language," he said.
"Switzerland is not going to rip up its deal with the EU on freedom of movement," he insisted.
The referendum measure binds the government to renegotiate the labour market deal within three years, with the current rules staying in force in the meantime.
An EU source said the vote had "no immediate consequence" for ties, since the ball remains in Switzerland's court.
The government said it aimed to draft a law this year to implement the vote. The EU source said that only then could Brussels decide whether Switzerland was breaching its treaty obligations.
If Switzerland were found at fault, it "would potentially have very serious consequences for our relationship across the board," the source said.
If the two sides fail to agree and Switzerland voids the free movement accord, then a "guillotine" clause comes into force to freeze the entire package of Swiss-EU deals including on trade.