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The consistent failure to match EU market integration with social policies provoked the development of new modes of European governance for welfare provision in the early 1990s. Based on policy co‐ordination rather than integration, these new governance modes were consolidated as the ‘Open Method of Co‐ordination’ (OMC) at the Lisbon Summit in 2000. This article analyses the scope and limits of the OMC, locating it in the context of broader trends and tendencies in governance and social provision. Indeed, the perceived ‘success’ of the OMC may reflect a deeper trend in social policy across western Europe and beyond, towards ‘active’ welfare policies. In many ways the OMC is consistent with the influential ‘regulatory state’ vision of the EU. Yet by ‘activating’ welfare the OMC may challenge market liberal theories of European economic regulation. The first seeks to integrate economic and social policies …