The new welfare state settlement in Europe

The post-war settlement rested on confidence that state welfare combined with neo-Keynesian economic management supported economic progress and enhanced social stability. New approaches from the 1970s onwards inspired by monetarism saw extensive state welfare as a damaging economic burden. The welfare settlement that is currently emerging in European debates argues that a welfare state centred on social investment, combined with appropriate de-regulation and use of social benefits to support employment mobility can again contribute to economic and social objectives in a virtuous spiral of growth and justice. In practice, however, most European states have been far more successful in what might broadly be called negative activation (less regulation, restrictions on passive benefits and targeted help for high-risk groups), than in investment to enhance the knowledge base and improve mobility. The differences between the new social investment welfare state and more limited de-regulated welfare system seem to be less marked in practice than the tenor of policy debate implies.