The role of the Alert Mechanism Report (AMR)

The Alert Mechanism Report (AMR) is the starting point of the annual cycle of the Macroeconomic Imbalance Procedure (MIP) which aims to proactively detect excessive macroeconomic imbalances in the European Union (EU).

ACT

Report from the Commission to the European Parliament, the Council, the European Central Bank and the European Economic and Social Committee - Alert Mechanism Report 2015 (prepared in accordance with Articles 3 and 4 of Regulations (EU) No 1176/2011 on the prevention and correction of macroeconomic imbalances) (COM(2014) 904 final of 28.11.2014).

SUMMARY

The Alert Mechanism Report (AMR) is the starting point of the annual cycle of the Macroeconomic Imbalance Procedure (MIP) which aims to proactively detect excessive macroeconomic imbalances in the European Union (EU).

WHAT DOES THE REPORT DO?

The report launches the annual cycle of the MIP. The MIP aims to identify and address imbalances that hinder the smooth functioning of the economies of EU countries and the overall EU economy, and which may jeopardise the functioning of economic and monetary union.

The AMR is published at the beginning of each European semester of economic policy coordination, together with the Annual Growth Survey. On the basis of an economic reading of a scoreboard of indicators it identifies the EU countries that are potentially affected by imbalances requiring, in a second step, an in-depth assessment investigating in more detail the risks of and adjustment to imbalances.

The scoreboard includes 11 main indicators, accompanied by a broader set of secondary indicators, broadly covering the scope of imbalances. This includes external imbalances (current account, external debt, export performance and competitiveness indicators), internal imbalances (housing markets, private debt, public debt, financial sector aspect indicators) as well as adjustments aspects (unemployment).

KEY POINTS

The main findings of this AMR of November 2014 are:

• macroeconomic imbalances remain a serious problem and underline the need for decisive, comprehensive and coordinated policy at EU level;
• maintaining competitiveness remains a major concern, especially for EU countries with large external imbalances;
• the high levels of public and private debt in most EU countries, as well as the high external liabilities in many, still constitute substantial vulnerabilities for growth, jobs and financial stability;
• unemployment and other social indicators are still of great concern in many EU countries;
• promotion of efficient investment to restore potential growth is a key priority.

Based on the economic reading of the MIP scoreboard, the Commission concluded that:

• in-depth reviews are justified in the case of 16 EU countries: Belgium, Bulgaria, Germany, Ireland, Spain, France, Croatia, Italy, Hungary, the Netherlands, Portugal, Romania, Slovenia, Finland, Sweden and the United Kingdom (1);
• in the case of countries receiving financial assistance (Greece and Cyprus), the monitoring of their imbalances and monitoring of corrective actions takes place in the context of their macroeconomic adjustment programmes;
• for other EU countries, there is no need for further analysis in the context of the MIP;
• The in-depth reviews were published on 27 February 2015 and integrated into the Commission country reports.

The AMR conclusions must be examined by the Eurogroup (if they concern euro area countries) and by the EU’s economic and financial affairs ministers. Taking into account their reactions, the Commission analyses the EU countries concerned to determine whether imbalances or excessive imbalances exist. The findings are taken into account in the country-specific recommendations issued under the European semester.

BACKGROUND

The ‘ Six-pack ’ entered into force in December 2011. It introduced a broader surveillance of economic policies in order to proactively detect problems related in particular to real estate bubbles in external viability or a loss of competitiveness. The AMR is part of the regular monitoring exercise under the MIP.

For more information:

• Macroeconomic Imbalance Procedure pages on the European Commission’s website
• European Commission press release.

last update 20.05.2015

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(1) The United Kingdom withdraws from the European Union and becomes a third country (non-EU country) as of 1 February 2020.