BRUSSELS, March 2 (UPI) -- A treaty to curb fiscal mismanagement was signed Friday by a majority of European Union countries, officials said.
Twenty-five of the EU's member states signed the treaty, which will now move through Europe's capital cities to be ratified by each country's parliament. Only Britain and the Czech Republic choose not to sign onto the agreement, which threatens economic sanctions on those who don't comply.
The treaty underscores the depth of the financial crisis in Europe, which the United Nations in a report issued Thursday said was putting a drag on global economic growth, specifically slowing world's manufacturing sector.
The International Monetary Fund said earlier this month that Europe was likely to fall into a mild recession this year.
In addition, debt burdens in countries like Greece, Portugal, Spain and Italy have threatened to put an enormous strain on Europe's financial system.
Wake-up calls of that magnitude are behind the treaty that was pushed by Germany and mandates participating countries to pass balanced budget laws. Member states that fail to adhere to fiscal restraints spelled out in the treaty can be sanctioned by having restrictions placed on their discretionary spending, the EUobserver reported.
"It's effects will be deep and long-lasting." said EU council president Herman Van Rompuy before the signing ceremony.
The treaty will help avert a second debt crisis, he said.
But some analysts question how much clout the treaty will have. Britain not only opted out, but vetoed a full-scale treaty change.
That will make it difficult to implement, as countries that do not comply with the balanced budget rules will have to be sued by another country, which will create international tension if it is enforced.
The treaty, however, is part carrot, part stick. Only countries that have ratified the treaty will be able to make use of the Europe's permanent international bailout funds, the EUobserver said.
The treaty goes into effect when 12 of 17 eurozone countries ratify it.