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Globalisation is one of the defining phenomena of today’s economy, albeit one that is loosely defined and prone to exaggeration. For many, globalisation is an opportunity, affording scope on the supply side for increased specialisation, enhanced diffusion of technology, and a competitive spur to innovation and productivity growth. Yet for others, globalisation is perceived to be a threat to the values, institutions and policies that have underpinned post-war Europe’s success and way of life, in short to social Europe. This study examines the social impact of globalisation for the EU economies and the policy challenges that arise. It starts by looking at the conceptual background, then provides an extensive empirical analysis of the different facets of globalisation and its social dimension, and moves on to discuss policy issues. The study’s key message is that the EU as a whole will gain from globalisation, but that these gains will not be uniformly distributed across individuals, regions and countries. Nor will they accrue automatically, but will instead depend on successful adaptation and well-judged policy responses. In particular, the EU has to balance its efforts to boost competitiveness and to transform its economy by adopting and implementing policies that smooth the adjustment process and offer sufficient protection to those vulnerable to the changes and uncertainties that globalisation will bring.