The 'No' result has had a negative effect on the euro

Medef president Ernest-Antoine Seilliere said the vote "weakens the French economy, France and Europe".

The danger, he said, was that pro-business reforms might stall, leaving France uncompetitive.

The euro dropped to a seven-month low against the dollar, but analysts said the fall was not serious.

The single currency fell as far as $1.2463 in European trading, its lowest level since mid-October.

Although France's "No" vote has had an inevitable downward effect on the euro, analysts said the main reason for the euro's current lows was the recent string of interest rate rises in the US.

Uncertainty ahead

Certainly this is a vote in favour of the French model of Europe, which is a lot of social welfare and in the eyes of Anglo-Saxon investors, not much growth and big debt Kit Juckes, analyst

Mr Seilliere also warned France could fail in its pursuit of the Lisbon Agenda, which lays out a far-reaching reform programme to make the European economy more competitive on the world stage.

Experts believe that French voters gave a resounding "No" to the treaty amid disappointment over current economic reform efforts, rising unemployment and fears that cheaper Eastern European manufacturing could mean fewer jobs in France.

"People will say this is one in the eye for the establishment and the government, but what counts for the economy is the reaction of business," said Mark Cliffe, of ING Financial Markets.

"A 'No' is hardly calculated to boost business confidence in the coming months so it is hard to see this as being positive for economic activity."

French finance minister Thierry Breton agreed, warning that the country was entering a time of great uncertainty. He called on the government to increase its efforts to boost the economy.

Analysts added that the vote could also result in French companies putting off decisions to take on more staff or invest in their businesses.

Reform drive

Instead, analysts predicted French President Jacques Chirac would respond with a cabinet shake-up and a swathe of new consumer-friendly reforms.

"Certainly this is a vote in favour of the French model of Europe, which is a lot of social welfare and in the eyes of Anglo-Saxon investors, not much growth and big debt," said Kit Juckes, strategist at RBS Financial Markets.

French farm minister Dominique Bussereau has vowed to remain "vigilant" to any attempts to change the Common Agricultural Policy (CAP), of which France is a key beneficiary.

Meanwhile Nicolas Sobczak, a senior analyst at Goldman Sachs, predicted that while the government was likely to cut taxes and raise spending it would be "extremely cautious" about any reforms.

Several EU leaders said that while they regretted the French decision, the country could revisit the vote at a later date.