25 EU Leaders Sign Fiscal Stability Pact

All the countries of the European Union, with the exception of the United Kingdom and the Czech Republic, signed Friday morning the region's new fiscal pact, which sets strict new rules on deficits and debts.

The leaders of the 25 EU Member States countries initialed the so-called "Treaty for stability, coordination and governance in the economic and Monetary Union" at an EU Summit in Brussels.

European Council President Herman Van Rompuy defined the treaty as an "important step to restore confidence in the EU" which will "help to prevent a repetition of the sovereign debt crisis".

"It's a strong signal that we've drawn lessons from the crisis," German chancellor Angela Merkel said before the signing ceremony, adding that the pact is a "huge step towards creation of a European stability union."

The pact, whose text was finalized in late January, requires the countries to enshrine in national law a so-called "golden rule" to balance budgets or face automatic sanctions.

It will take effect once 12 of the 25 states have ratified the pact.

Any country that fails to ratify the treaty would be blocked off from the region's bailout funds in spring 2013.

The ratification process may be complicated by Ireland's plans to hold a referendum on the pact.

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