Macroeconomic surveillance in the euro area
13/12/2012
A new process for preventing and correcting macroeconomic imbalances aims to address the causes of persistent economic divergences within the eurozone.
With the 2011 legislative package on economic governance (the "six-pack"), the Council of the EU and the European Parliament introduced a new process for preventing and correcting macroeconomic imbalances.
The process strengthens the coordination of economic policies. Although it applies to all EU countries, it has stricter enforcement mechanisms for euro area members.
Alert mechanism
The process starts with an alert mechanism report based on a scoreboard of indicators for all EU member states. This mechanism is triggered if the values of individual indicators go beyond agreed thresholds. On this basis, the Commission conducts an annual assessment and, if necessary, an in-depth review of individual member states.
Corrective action plan
If the Commission identifies excessive imbalances during its in-depth review, the Council can adopt policy recommendations for the member state concerned.
The member state must then submit a corrective action plan outlining the measures it proposes to take in order to correct the imbalances.
Close monitoring
The implementation of this plan is closely monitored by the Commission. If the country concerned does not comply with its recommendations, an 'excessive imbalances procedure' may be formally opened. For euro area member states, this procedure may lead to financial sanctions.
In such cases, only euro area ministers can cast their vote in the Council. Therefore, preliminary discussions on these matters may take place in the Eurogroup, on the eve of the Council meeting.