The European Social Model, involving high levels of government spending and taxation, labour and product market regulation and the involvement of the “social partners”, is in crisis. The core European economies are experiencing low economic growth, slow job creation and high levels of unemployment. In the longer term, demographic pressures are a serious concern. Faced with these problems, economists argue for reform but politicians find this difficult and the European Union is in political crisis. This article explores these issues and suggests that the answers lie at national rather than EU level.