Switzerland is introducing what could be one of the most dangerous experiments in the history of immigration reform.

Swiss voters approved a plan in referendum on Sunday that will set new limits on the number of foreigners who can settle and work in their country. Details haven’t been worked out yet, but strict curbs would be catastrophic for major Swiss industries such as pharmaceuticals, where 45 percent of employees—mainly skilled professionals—come from outside the country.

Although the government isn’t required to put restrictions in place for another three years, employers are likely to start scaling back investment and hiring now, economists Giles Keating and Fredy Hasenmaile of Credit Suisse (CS) warned in a research note. “Uncertainty is poison for investment,” they wrote, adding that Switzerland will pay “a high price” for its decision.

One in five people living in Switzerland is a foreign national. Industry groups say foreign workers account for 45 percent of employees at Swiss pharmaceutical, chemical, and biotechnology companies. Some 25 percent of Swiss bank employees are citizens of neighboring European Union countries, according to the Swiss Bankers Association. The group “fears that the available pool of trained staff will decrease,” a spokeswoman says.

Keating and Hasenmaile predict that passage of the ballot measure will cause employment growth to contract by 50 percent in 2014, with some 80,000 fewer jobs created over the next three years, and economic growth this year is likely to slump from a forecast 2 percent to 1.7 percent.

The damage perhaps wouldn’t stop there. Switzerland’s real estate market would suffer, as many rental developments cater to newly arrived executives. The vote also could hurt Switzerland’s economically vital relationship with the EU, its top export market. Currently, EU nationals are allowed to live and work in Switzerland without restriction. “In the interest of Europe, Germany, but also in its very own interest, Switzerland shouldn’t take the path of progressive self-isolation now,” Andreas Schockenhoff, deputy chairman of German Chancellor Angela Merkel’s Christian Democratic Union, told Bloomberg News.

Anti-immigrant sentiment often surges during periods of high unemployment—yet Switzerland’s jobless rate is just 4.4 percent, one of the lowest in the developed world, according to the Organisation for Economic Co-operation and Development. Still, supporters of the ballot initiative said an influx of foreigners has created housing shortages and traffic bottlenecks. “It’s clear that immigration needs to be reduced,” Toni Brunner, president of the euro-skeptic Swiss People’s Party, told Bloomberg News. “We need to be more selective.”

The ballot initiative doesn’t set specific limits on immigrant arrivals. It simply requires the use of caps and quotas to stop “mass immigration,” as well as requiring that Swiss nationals be given priority in hiring, says Reto Huenerwadel, an economist at UBS (UBS). The government is likely to move cautiously in imposing quotas, given the alarm in the business community and because the ballot measure passed by only 50.3 percent.

Even so, the Swiss vote is likely to encourage anti-immigrant parties in other European countries where polls show rising support for immigration curbs. “What the Swiss can do, we can do too: cut immigration and leave the EU,” Geert Wilders, head of the Dutch Freedom Party, posted on Twitter (TWTR). Marine Le Pen, the leader of France’s anti-immigrant National Front, also hailed the Swiss vote in an interview on Europe 1 radio, saying: “The country is our house. We the people have the right to decide who comes in.”