Data extracted on 31 October 2024
Planned article update: December 2025
This article provides information on the Macroeconomic Imbalance Procedure (MIP), as well as on indicators and statistical data used in this context. The MIP is part of the European Semester, which is an annual cycle that enables the European Union countries to coordinate their economic and social policies throughout the year. The MIP surveillance framework aims to identify potential macroeconomic risks early on, preventing the emergence of harmful macroeconomic imbalances and allowing the correction of the imbalances that are already in place.
Background
Regulation (EU) No 1176/2011 defines a macroeconomic imbalance 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 an EU country or of the Economic and Monetary Union, or of the European Union as a whole.
While excessive imbalances are defined in the same legal act as:
- severe imbalances that jeopardise or risk jeopardising the proper functioning of the Economic and Monetary Union.
The MIP covers a number of sequential steps, having the Alert Mechanism Report (AMR) and its Statistical Annex (SA) as a starting point, with the AMR being an initial screening device providing an economic reading of the MIP scoreboard. The Statistical Annex and the Alert Mechanism Report are published at the same time, based on the last available annual data. The AMR for year t is published in year t - 1, with data based on year t - 2 (e.g. the 2025 AMR is published in December 2024 based on 2023 data).
Table 1 below shows the MIP scoreboard indicators values used within the latest AMR.
Source: Eurostat, Statistical Annex of 2025 Alert Mechanism Report
Following the Commission proposal for a regulation on the effective coordination of economic policies of 26 April 2023, the MIP procedure is focused on a forward-looking perspective, on emerging risks, and on the evolution of imbalances. Great attention is given to systemic challenges and to developments in the European Union and euro area. In this context, EU and euro area aggregates have been added to the procedure and are therefore presented in the statistical annex. In 2024, both the scoreboard and the auxiliary indicators were streamlined as part of the regular review process set out in the MIP regulation (Art. 4(7) of Regulation 1176/2011). For more information, see "Changes to the 2025 MIP scoreboard" under The MIP indicators.
The Macroeconomic Imbalance Procedure (MIP) in the context of the European Semester
Since 2010, the European Union is running an annual cycle of economic and social policy coordination called the European Semester. By achieving stronger economic and social coordination of EU countries policies, the European Semester aims to ensure sustainable economic growth, job creation, macroeconomic stability and sound public finances across the EU. On 30 April 2024, the European Semester was revised as part of the Economic Governance Review (EGR), which seeks to ensure a simpler, more transparent and effective framework with greater national ownership and better enforcement.
The European Semester follows a specific 1-year cycle that begins in autumn, with the publication of a policy package, known as the Autumn Package. One component of this package is the Alert Mechanism Report (AMR), which is the starting point for the annual surveillance under the Macroeconomic Imbalance Procedure (MIP). The aim of the MIP is to identify potential risks early on, prevent the emergence of harmful macroeconomic imbalances and correct any imbalances that have already materialised. It is supported by the analysis of a set of headline and auxiliary indicators, the scrutiny of which could trigger further analysis at country level.
The conclusion of the AMR lays out the list of countries for which the Commission will prepare country-specific in-depth reviews (IDR), that encompass a thorough assessment of imbalances in the country under review, taking into account country-specific economic conditions. Eurostat is in charge of producing the Statistical Annex to the AMR, a document presenting the MIP indicators for a 10-year period for each EU country and, since 2023, for the European union and the euro area. The IDRs then provide a comprehensive assessment of imbalances based on a wide set of data – starting with the MIP scoreboard – and other relevant information, also assessing the risks of spillovers of macroeconomic imbalances to other euro area countries. Based on IDRs, the Commission concludes whether imbalances or potentially excessive imbalances exist.
The conclusions of the IDRs then inform the Commission’s proposal of country-specific recommendations on economic and social policy addressed to each EU country in spring. In the summer, the Council agrees on the final version of the country-specific recommendations, highlighting areas where countries need to take further actions to boost growth, job creation, training and education opportunities, research and innovation. The countries are then invited to address these recommendations, for instance through their reform, public investment and national budgetary plans for the following year.
Outcome of the 2025 AMR
The latest Alert Mechanism Report (AMR 2025) was published on 18 December 2024. The economic reading of the MIP scoreboard considers outcomes for 2023 and is interpreted in light of available data for 2024 and the Commission’s 2024 autumn forecast. This report considers the context of a slightly strengthening economic activity, as the EU economy returns from a challenging period. The outlook is however subject to numerous risks which can exacerbate economic vulnerabilities in the near future.
The conclusion of the AMR 2025 states that IDRs will be prepared for the 9 countries that were identified as experiencing imbalances or excessive imbalances in 2024: Cyprus, Germany, Greece, Italy, Hungary, the Netherlands, Romania, Slovakia, and Sweden. In addition, the economic reading of the scoreboard leads to the conclusion that an IDR should be undertaken for Estonia, as it presents particular risks of newly emerging imbalances.
The MIP indicators
MIP indicators cover external and internal imbalances, competitiveness positions, labour market and social aspects. They are calculated from several statistical areas, including national accounts (NA), balance of payments (BoP) statistics, price statistics, excessive deficit procedure (EDP) statistics, labour market and living conditions statistics. Indicators stemming from the national accounts, balance of payments and international investment position (IIP) domains are computed following the European System of Accounts 2010 (ESA 2010) and the Balance of Payments and International Investment Position Manual, 6th edition (BPM6) that guarantee a high level of comparability and internal consistency across European Union Member States.
A 3-level quality assurance framework ensures the quality of the MIP indicators. The first level assesses the reliability and comparability of indicators underlying statistics and addresses relevant quality issues; it enhances the communication on quality assurance of MIP statistics towards the European Parliament and Council, policy makers and the public at large by the annual publication of a quality report. This report draws on the information gathered in levels 2 (domain-specific quality reports produced by Eurostat and the ECB) and 3 (national quality reports/self-assessments produced by the institutions compiling the national statistics).
The MIP scoreboard is a tool to support the early identification and monitoring of imbalances, and it comprises a limited number of relevant and high quality macroeconomic, financial, and social indicators. Each scoreboard indicator has indicative thresholds serving as alert levels. However, since not all imbalances necessarily require policy intervention as they might be justified by an economy's dynamic adjustment, the MIP scoreboard should not be interpreted mechanically. Moreover, the economic reading of the scoreboard indicators is complemented by the analysis of a wider set of auxiliary indicators that do not have any associated threshold.
Data sources
The MIP scoreboard and auxiliary indicators are mainly compiled by Eurostat, from the data transmitted by EU countries, following European legislation, although some data are produced by the Commission's Directorate General for Economic and Financial Affairs (DG ECFIN), the Organisation for Economic Co-operation and Development (OECD) for the denominator of one scoreboard indicator, the International Monetary Fund (IMF) for the denominator of one auxiliary indicator, and the European Central Bank (ECB) for 3 auxiliary indicators based on banking data. The composition of the indicators set is subject to review and it may evolve over time in order to reflect new developments or needs.
MIP indicators in the 2025 Statistical Annex (SA)
The MIP scoreboard for the 2025 AMR consists of 13 scoreboard indicators with indicative thresholds: these indicators cover external imbalances and competitiveness, internal imbalances, labour market and social issues. Supplementing the MIP scoreboard indicators, a list of auxiliary indicators provides additional information on aspects linked to the general macroeconomic situation. Auxiliary indicators (see Table 3) enhance the information base for understanding potential imbalances, as well as the adjustment capacity of a country's economy.
Changes to the 2025 MIP scoreboard
In 2024, a number of revisions were introduced to the scoreboard and the auxiliary indicators with the aim of streamlining and taking into account ongoing statistical quality improvements, while at the same time preserving the stability and relevance of the sets of indicators for MIP surveillance. The main changes are outlined below, and a summary can be found in Table 4.
Concerning external imbalances and competitiveness, the indicator for export market shares in percentage of world exports has changed position with the previous auxiliary indicator export performance against advanced economies, and they are both expressed as a 3-year percentage change instead of 5. Meanwhile, the nominal unit labour cost index, as well as the auxiliary indicator on labour productivity, will be measured on a per-hour instead of on a per-person employed basis. There has also been a new auxiliary indicator added representing the core inflation differential vis-à-vis the euro area, and real GDP is now expressed in per capita.
For internal imbalances, private debt and private credit flows are covered in more detail by a decomposition into the household (including non-profit institutions serving households) sector and the non-financial corporations (NFC) sector. Scoreboard debt stock indicators are expressed as a percentage of GDP, while the credit flows are measured for year t as a percentage of the corresponding debt stock in year t-1. For NFC credit flows, foreign direct investments (FDI) have been excluded from the computation of the indicator both in the numerator and the denominator. Additionally, there is one auxiliary indicator added on household debt, but as a percentage of gross adjusted disposable income (adjusted GDI).
The scoreboard indicator on total financial sector liabilities has been removed. The financial sector will be monitored henceforth through 3 auxiliary indicators covering the banking sector, of which 2 are new additions (the tier-1 capital ratio of the banking sector as a percentage of risk-weighted assets, and the return on equity of the banking sector in percentage).
The house price index in the MIP scoreboard is now measured in nominal terms rather than deflated. Moreover, there have been 2 new auxiliary indicators introduced concerning the housing market, namely the standardised house price-to-income ratio (defined as the ratio of the current house price-to-income ratio relative to the long-term average house price-to-income ratio) and building permits (measured as square meters per 1 000 inhabitants).
Regarding social and labour market indicators, the scoreboard indicators on long-term and youth unemployment have been moved from the scoreboard to the auxiliary indicators set. The scoreboard indicator activity rate has been renamed labour force participation rate (according to Regulation (EU) 2019/1700), and the unemployment rate is expressed in annual data rather than as a 3-year average. The young people neither in employment nor in education or training indicator now covers the age group 15-29, and employment is now measured as the rate of the number of persons aged 20 to 64 in employment to the total population of the same age group (based on the EU Labour Force Survey).
Some auxiliary indicators have been omitted for the sake of parsimony. In addition, alongside the restructuring of indicators, certain indicative thresholds for the scoreboard indicators have been adjusted. More information on the changes made are provided in staff working document SWD(2024) 702 on the scoreboard revision accompanying the AMR 2025.
Recent statistical improvements
Looking at data quality, and in particular to cross-domain consistency, Eurostat continues to work on the reconciliation of the balance of payments and the rest of the world (RoW) account at national level, and regularly assesses the state of consistency between BoP and NA statistics. Furthermore, the implementation of the harmonised European revision policy (HERP) for National Accounts and Balance of Payments statistics, covering benchmark and routine revisions, is progressing on a voluntary basis. Following recommendations of the HERP, EU countries – with one exception - are carrying out a benchmark revision of their national accounts estimates in 2024. The purpose of this benchmark revision is to implement changes introduced by the amended ESA 2010 regulation, and to incorporate new data sources and other methodological improvements.
In the BoP domain, progress has been made on addressing asymmetries in statistics for trade in goods and services and foreign direct investment. Eurostat carried on activities to further reduce asymmetries, in particular the follow up of some of the recommendations resulting from ITSS Asymmetry Resolution Meetings (ARM), an ongoing initiative to obtain the Member States’ VIES (VAT Information Exchange System) data for the intra-EU exports side, and the development of a flexible tool to exchange on a bilateral basis information on compensation of employees. In addition, Eurostat is facilitating bilateral and multilateral reconciliation exercises to reduce asymmetries in data on foreign direct investment (together with the ECB) and on international trade in services.
Eurostat is working to provide further guidance on the treatment of non-resident VAT traders in BoP statistics. Eurostat hosted under the umbrella of its BoP Working Group, and in close cooperation with the GNI Expert Group, a workshop on non-resident VAT traders in April 2024. Based on the findings from this workshop and an earlier survey, Eurostat has updated the ESA 2010 Methodological note (2024 update) on Foreign trade reported by non-resident VAT traders. This note provides recommendations for compilers of NA and BoP statistics to follow the principle of change of economic ownership as required by ESA 2010 and BPM6 in case of foreign trade reported by non-residents. Eurostat and the ECB follow several initiatives to improve consistency and reduce asymmetries. In view of regular data comparisons, Eurostat conducts regular comparisons of quarterly BoP and quarterly/annual sector accounts for the RoW sector. The harmonisation of methodological standards (ESA2010 and BPM6) has helped to eliminate some previous discrepancies.
In the domain of Financial Accounts, statistical work is planned which will be important for the quality of MIP indicators: the recording of other equity, of derivatives, of loans between non-financial corporations, of foreign-controlled corporations and special purpose entities, and of the vertical discrepancy with non-financial sector accounts. On the latter, Eurostat and the ECB published a report with recommendations aiming at improving vertical consistency across institutional sectors to enhance cross-country comparability.
Concerning the Labour Force Survey (LFS), in 2021, the EU regulation 2019/1700 (Integrated European Social Statistics Framework regulation, IESS FR) entered into force, together with its LFS implementing regulation (the EU regulation 2019/2240). Innovations concern all aspects of the survey, in order to harmonise survey fundamentals among countries. Together with the IESS regulation, several countries introduced national specific innovations. Due to pre-existing differences among national surveys, it is not possible to assess the overall impact of the new regulation on the survey results: the further a country was from the harmonised new standards, the more that country was affected by the change. Some countries show figures in line with those of the old LFS series, while others declare relevant breaks. Consistency in MIP scoreboard indicators stemming from the LFS has been ensured thanks to back-calculation, as required by the new regulation. Although labour market indicators in the MIP Scoreboard may show different figures than in the past, including in the initial part of the series, series are consistent over time and multi-annual indicators are calculated with consistent figures.
In the House Prices domain, the Commission Implementing Regulation (EU) 2023/1470, which lays down the methodological and technical specifications of the house price index and the owner-occupied housing price index, was adopted in 2023. This regulation is being applied to all data transmissions as of 1 January 2024, and previously transmitted data have, where necessary, been revised where data sources are available.
General Government Gross Debt data notified for the years 2020 to 2023 were released, within the EDP notification, on 22 October 2024. For more information on the main revisions between April 2024 and October 2024 notifications, please see the latest EDP news release. The majority of EU countries disclosed the results of the 2024 harmonised benchmark revision with this release, and timeliness and availability of general government gross debt data remained excellent.
In 2022 there was a change in concepts in the domain of Income and Living Conditions (EU-SILC) in order to better measure deprivation, based on a revised list of items, as well as to better account for the social exclusion situation of people in the working age group (aged 18 to 64 instead of 18 to 59). This change impacted 3 MIP auxiliary indicators: People at risk of poverty or social exclusion, severely materially and socially deprived people, and people living in households with very low work intensity. Following the entry into force of the Regulation (EU) 2019/1700, timeliness improved further for the EU-SILC 2023 data.
Published AMRs
The complete list of the AMRs, Statistical Annexes and Eurostat's press releases are published on the MIP dedicated web section. Table 5 shows the publication dates of the different editions of the AMRs.
In the 2016 Communication on Country Reports, in order to ensure more effective and simpler communication, the macroeconomic imbalances categories have been streamlined from 6 to 4: no imbalance, imbalances, excessive imbalances, and excessive imbalances with corrective action (Excessive Imbalance Procedure, EIP).
Source: Commission communication on 2016 Country Reports including In-Depth Reviews - COM(2016) 95 final/2
LEGISLATION:
The rules on economic governance (introduced through the Six Pack, the Two Pack (Regulation (EU) No 472/2013 and Regulation (EU) No 473/2013 of 21 May 2013) and the Treaty on Stability, Coordination and Governance) are grounded in the European Semester - the EU's annual cycle of economic policy guidance and surveillance. The fully-fledged mechanism for the prevention and correction of macroeconomic imbalances is made up of 2 regulations:
- Regulation (EU) No 1176/2011 of 16 November 2011 on the prevention and correction of macroeconomic imbalances - sketching out the excessive imbalances procedure
- Regulation (EU) No 1174/2011 of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the euro area - focusing on the associated enforcement measures.
For more information on the MIP scoreboard, see: Macroeconomic imbalance procedure scoreboard.
Explore further
Other articles
Thematic section
Selected datasets
Methodology
Methodological information on the indicators is published on the Eurostat MIP methodology web section and in the respective metadata files:
- Current account balance and balance of payments (ESMS metadata file — tipsbp_esms)
- International investment position (ESMS metadata file — tipsii_esms)
- Net external debt (ESMS metadata file — tipsed_esms)
- Real effective exchange rate (ESMS metadata file — tipser10_esms)
- Export market shares (ESMS metadata file — tipsex_esms)
- Nominal unit labour cost (ESMS metadata file — tipslm10_esms)
- House price indices (ESMS metadata file — tipsho_esms)
- Private sector credit flow (ESMS metadata file — tipspc_esms)
- Private sector debt (ESMS metadata file — tipspd_esms)
- General government gross debt (ESMS metadata file — tipsgo10_esms)
- Quarterly government debt (ESMS metadata file — gov_10q_ggdebt_esms)
- Unemployment rate (ESMS metadata file — tipsun_esms)
- Total financial sector liabilities (ESMS metadata file — tipsfs_esms)
- Activity rate (ESMS metadata file — tipslm60_esms)
- Annual national accounts (ESMS metadata file — na10_esms)
- Quarterly national accounts (ESMS metadata file — namq_10_esms)
- Statistics on research and development (ESMS metadata file — rd_esms)
- International trade in goods (ESMS metadata file — ext_go_esms)
- Poverty and social exclusion (ESMS metadata file — tipspo_esms)
External links
- DG ECFIN MIP dedicated web section
- DG ECFIN web section: In-depth reviews
- European Semester dedicated web section