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This text examines the political economy of the European Union and the process of economic integration in Western Europe. It identifies the distinguishing features of this new European economy and the main challenges for the future. The text contains a full discussion of the enlargement of the EU and its recent incorporation of new nations. It examines aspects of this enlargement in a new chapter on regional and structural issues, with a complete explanation of EU regional policy. In addition, the coverage of monetary union issues is fully revised to include events up to the end of 1996, and provides a considered analysis of the probability of monetary union and its likely timescale. Finally, a new section on EU social policy should enable students to receive an introduction to an increasingly important aspect of the EU - its impact on the lives of its citizens. It should be relevent reading for students of European studies, European economics, or European politics, as well as practitioners and anyone interested in the future of Europe.