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European Commission presents its first annual Alert Mechanism Report

14.02.2012 - The European Commission has presented its first annual Alert Mechanism Report (AMR). It is the starting point of the Macroeconomic Imbalance Procedure (MIP), a new surveillance tool that helps to detect and correct risky macroeconomic developments in the EU and the euro area and thus strengthens the economic pillar of the Economic and Monetary Union. The MIP forms part of the so-called "six-pack" that entered into force on 13 December 2011.

The AMR screens EU Member States based on a scoreboard of ten macroeconomic indicators. It contains an economic reading of these indicators, and takes into account other relevant economic information with a view to get a comprehensive picture. On this basis, the European Commission has identified twelve Member States which may be affected by harmful macroeconomic imbalances, such as deteriorating positions of competitiveness, high level of indebtedness or corrections of asset price bubbles. In order to get a clearer picture, further country-specific reviews are required. It is these subsequent in-depth reviews that will assess whether or not harmful imbalances exist. If necessary, the European Commission will issue a recommendation to the Member State concerned, requesting it to take appropriate action to correct the situation.

The preventive arm of the MIP allows the European Commission and the Council to adopt recommendations at an early stage before imbalances become large. In more serious cases, a corrective arm applies and triggers an Excessive Imbalance Procedure. As a consequence, the Member State concerned will have to submit a corrective action plan and will be subject to enhanced surveillance. In order to ensure the enforcement of the Excessive Imbalance Procedure, financial sanctions can be imposed on euro area Member States.

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