3.4.1 Subsidiarity of Economic Regulation

The subsidiarity of economic regulation ranges from national to global, with most countries being largely autonomous – except in the EU.

Economic regulation plays a big part in determining how people are affected by an economy and how much power they have.  The different kinds of regulation described earlier (3.3.1) include safeguarding the individual, ensuring the smooth working of the economy and protection of the environment.  A European Union (EU) document on the principle of subsidiarity makes the following observations, which are not exclusive to EU governance:

“The principles of subsidiarity and proportionality govern the exercise of the EU’s competences. In areas in which the EU does not have exclusive competence, the principle of subsidiarity seeks to safeguard the ability of the Member States to take decisions and action and authorises intervention by the Union when the objectives of an action cannot be sufficiently achieved by the Member States, but can be better achieved at Union level, ‘by reason of the scale and effects of the proposed action’. The purpose of including a reference to the principle in the EU Treaties is also to ensure that powers are exercised as close to the citizen as possible, in accordance with the proximity principle referred to in Article 10(3) of the TEU.”

The subsidiarity of economic regulation is analysed in the following sub-sections:

●  Regulations are mostly applied within each country, with domains of control under national governments (

●  Members of the European Union (EU) have largely surrendered their autonomy in all these areas of regulation ( This prevents countries from gaining an advantage over each other by ‘a race to the bottom’ on regulation – so that companies compete on equal terms in a ‘common market’.  Britain’s decision in 2016 to leave the EU in a ‘Brexit’ was driven by national politics rather than economics, as described later (

●  There is a growing number of looser intergovernmental economic agreements at a global level ( These are not as comprehensive as national regulations, and some are informal.

●  National economic autonomy is limited by global agreements, and globalisation enables businesses to move to wherever suits them (

Specific regulations associated with bilateral, multilateral and regional trade deals are part of the contentious topic of free trade, described later in this chapter (  And environmental aspects are also described later (3.5.7).



Next Section

This page is intended to form part of Edition 4 of the Patterns of Power series of books.  An archived copy of it is held at https://www.patternsofpower.org/edition04/341a.htm.