This paper describes the ways in which EU law forces Member States to reorganise their welfare states, focusing on the effects of free movement and competition principles on health care, education, and social insurance. It then considers the consequences of such reorganisations for national identity and social cohesion, for domestic and foreign policy and European integration, and as the creation of a new welfare industry. The thesis of the first part is this: that the negative harmonisation of

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... welfare services via judicial application of free movement rules is potentially further reaching than often realised, and difficult to reverse. As a result of changes in welfare provision many services are now provided 'for remuneration'. Moreover, legal, policy, and philosophical factors make it difficult to create a wholesale exemption for welfare. On the other hand, positive harmonisation remains politically unpopular and difficult to achieve, and at more than a very abstract framework level would probably be economically and organisationally undesirable too. Hence Europe is moving towards a continent-wide market for welfare services.