Policy context
In 2010, the European Union set up a yearly cycle of economic policy coordination called the European Semester. This was done to ensure that EU countries discuss their budgetary and economic plans with their EU partners at specific times throughout the year.
The European Semester starts with the ‘Autumn package’, which includes the alert mechanism report (AMR) under the macroeconomic imbalance procedure (MIP).
The macroeconomic imbalance procedure (MIP) is a surveillance mechanism that aims to
- identify potential macroeconomic risks early on
- prevent the emergence of harmful macroeconomic imbalances
- correct the imbalances that are already in place.
A macroeconomic imbalance is defined as ‘any trend giving rise to macroeconomic developments which are adversely affecting, or have the potential to adversely affect, the proper functioning of the economy of a Member State or of the Economic and Monetary Union, or of the Union as a whole’.
Excessive imbalances are ‘severe imbalances that jeopardise or risk jeopardising the proper functioning of the Economic and Monetary Union’.
These definitions are based on EU regulation 1176/2011 on the prevention and correction of macroeconomic imbalances.
Each scoreboard indicator has a threshold assigned. This threshold acts as a warning signal to point out potentially harmful economic imbalances. They are ‘indicative’, as imbalances are assessed through an economic evaluation.
Due to the economic reading of the scoreboard indicators, there is no automatic mechanism: exceeding 1 or more indicative thresholds does not necessarily imply that macroeconomic imbalances are emerging.
Further reading
- Commission communication on EU economic governance (April 2023, PDF)
- Economic and fiscal governance
- Technical note – Envisaged revision of selected auxiliary indicators of the MIP scoreboard (September 2018, PDF)
- The Macroeconomic Imbalance Procedure – Rationale, process, application: A compendium (November 2016, PDF)
- Scoreboard for the surveillance of macroeconomic imbalances: technical explanations on the scoreboard (February 2012, PDF)
- Scoreboard for the surveillance of macroeconomic imbalances: envisaged initial design (November 2011, PDF)