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Background Notes

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Ireland and all EU member states have obligations to ensure that their economies do not exceed various thresholds on indicators monitored by the European Commission. The Macroeconomic Scoreboard publication is designed to help users to verify the European Commission's data on Ireland and provides additional analysis.

This publication focuses on the Macroeconomic Imbalance Procedure (MIP) scoreboard and the criteria of the Stability and Growth Pact. The recent financial crisis in 2008 highlighted the importance of the early detection and correction of macroeconomic imbalances across EU countries and the euro area. This led the European Commission to develop the MIP which came into force in December 2011 as part of the 'six-pack' of legislative acts which strengthens the monitoring of macroeconomic policies in the EU and the euro area. Ireland first came into this framework in 2014 after exiting the EU-IMF Programme of Financial Support at the end of the previous year.

Under the Macroeconomic Imbalance Procedure (MIP) potential macroeconomic vulnerabilities of EU countries are assessed by the European Commission using defined standard indicators related to both internal and external macroeconomic imbalances.

Internal imbalances are imbalances that can arise from public and private indebtedness; financial and asset market developments, including housing, the evolution of private sector credit flow and the evolution of unemployment.

External imbalances can arise from the evolution of current account and net investment positions of member states, real effective exchange rates, share of world exports and nominal unit labour costs.

The MIP is built around a 'two-step' approach with the first step consisting of the MIP scoreboard which acts as an alert mechanism. The MIP scoreboard is made up of 14 indicators which monitor any potential internal or external macroeconomic imbalances. The MIP Scoreboard indicators are accompanied by indicative thresholds which are used to identify any potential economic imbalances. The indicators are mainly compiled by Eurostat with Irish data provided by the CSO.

Excessive threshold breaches on the MIP scoreboard trigger in-depth studies undertaken by the Commission which act as the second step of the MIP. If such imbalances are problematic, then the Commission may substantiate policy recommendations if appropriate.

Set out in table 6.1 below are the 14 headline indicators from the latest round of the MIP Scoreboard.

Please note: Throughout this publication some small differences between CSO and Eurostat series may exist. These relate to data vintages.

Documentation outlining the Scoreboard indicators can be found on the European Commission website at:
http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/op92_en.htm

The MIP Scoreboard is just one component in the preventive arm of the economic surveillance framework which the European Commission has in place to monitor economic developments in member states. Details of this surveillance framework, and the functioning of the MIP Scoreboard within it, can also be found on the European Commission website at:
http://ec.europa.eu/economy_finance/economic_governance/index_en.htm

Further details of the framework of governance and economic surveillance within the EU can also be found on the website of the Department of Finance at:
http://www.finance.gov.ie/what-we-do/eu-international/european-semester-and-eu-governance

Show Table: Table 6.1 Macroeconomic Imbalance Procedure Scoreboard for Ireland, 2007-2017

Show Table: Table 6.2 List of Auxiliary Indicators

Sources and Quality Reports

The statistical areas in the CSO providing the data for compilation of the MIP Scoreboard are:
- Balance of Payments (BOP)
- National Accounts (NA)
- Financial Accounts (FA)
- Government Financial Statistics (GFS)
- Prices
- Labour Force statistics (LFS)
- Quarterly National Household Survey (QNHS)

1. Current Account Balance (% of GDP)
Institution: CSO
Statistical domain: BOP
Domain Specific Quality Report: BOP Quality Report

2. Net International Investment Position (% of GDP)
Institution: CSO
Statistical domain: BOP
Domain Specific Quality Report: BOP Quality Report

3. Real Effective Exchange Rate
Institution: Director General Economic & Financial Affairs (DG ECFIN), World Bank

4. Share of World Exports
Institution: CSO, Eurostat, World Bank
Statistical domain: BOP
Domain Specific Quality Report: BOP Quality Report

5. Nominal unit labour cost
Institution: CSO
Statistical domain: NA, QNHS
Domain Specific Quality Report: QNHS Quality Report

6. House Prices (deflated)
Institution: CSO
Statistical domain: Prices
Domain Specific Quality Report: RPI Quality Report

7. Private Credit Flow (% of GDP)
Institution: CSO
Statistical domain: BOP
Domain Specific Quality Report: Quality Report for Annual Financial Accounts (PDF 645KB)

8. Private Debt (% of GDP)
Institution: CSO
Statistical domain: BOP
Domain Specific Quality Report: Quality Report for Annual Financial Accounts (PDF 645KB)

9. General Government Gross Debt (EDP) (% of GDP)
Institution: CSO
Statistical domain: GFS

10. Unemployment Rate
Institution: CSO
Statistical domain: LFS
Domain Specific Quality Report: LFS Quality Report

11. Total Financial Sector Liabilities
Institution: CSO
Statistical domain: FA
Domain Specific Quality Report: Quality Report for Annual Financial Accounts (PDF 645KB)

12. Activity Rate
Institution: CSO
Statistical domain: LFS
Domain Specific Quality Report: LFS Quality Report

13. Long-term Unemployment Rate
Institution: CSO
Statistical domain: LFS
Domain Specific Quality Report: LFS Quality Report

14. Youth Unemployment Rate
Institution: CSO
Statistical domain: LFS
Domain Specific Quality Report: LFS Quality Report