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Glossary of summaries

Excessive imbalance procedure

The excessive imbalance procedure is the corrective arm of the EU's macroeconomic imbalance procedure (MIP). The MIP is a key element in the EU’s reformed economic governance framework brought into being following the 2008 financial crisis.

The procedure is designed to:

  • identify potential risks at an early stage (an alert mechanism),
  • prevent the emergence of harmful macroeconomic imbalances, and
  • correct any imbalances that are already in place.

If the alert mechanism identifies concerns over a country’s macroeconomic imbalances, the European Commission and the Council can adopt preventive country-specific recommendations.

In more serious cases, the excessive imbalance procedure may be triggered. The country which is found to experience excessive imbalances has to submit an action plan with clear milestones and deadlines for implementing corrective action in line with the recommendations. The Commission closely monitors its progress.

Sanctions of up to 0.1 % of the country’s gross domestic product (GDP) may be imposed by the Council, in the event that a euro area country repeatedly fails to take the agreed measures or if its corrective action plan is insufficient.

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