Chapter 7 discusses the relationship between European and national powers in the field of crucial socioeconomic policies and institutions. These policies - from education to business environment to judicial and tax systems, healthcare, industrial relations, labour market institutions, social security, etc. – are responsible for economic prosperity, social stability and political resilience of European societies. Nonetheless, they have also been traditionally perceived as falling within core state powers, and as such shielded from substantial influences of European institutions. While some scholars have seen signs of their systemic convergence, this chapter argues that the process of serious divergences in the very foundations of economic prosperity has been progressing, especially in the Eurozone. It also asserts that attempts to steer national policies in these fields by conditions of international financial assistance programmes have been either inchoate or improperly designed, and that European economic policies more generally have played a very ambivalent role in the process of mounting economic and social divergences in the EU.