European Union leaders signed Friday a new treaty designed to force governments to adopt balanced budgets through a "golden rule" or face fines

European Union leaders signed Friday a new treaty designed to force governments to adopt balanced budgets through a "golden rule" or face fines.
  
The Treaty for Stability, Co-ordination and Governance, the bedrock response to a two-year public debt crisis that forced bailouts for Greece, Portugal and Ireland, was signed by 25 of the bloc's 27 leaders.
  
It will take effect once the first 12 of the 25 states have ratified the pact. Ireland has already announced plans for a referendum before the treaty can apply there.
 
If states do not ratify the treaty, they will be blocked from bailout funding from a related rescue firewall being set up as of July this year. In the pact, states that fail to adequately implement the sharpened rules in national law will be dragged before the European Court of Justice.
  
The treaty updates the EU's Stability and Growth Pact, first agreed in the 1990s and last reformed in 2005. Few of the 25 states approving the treaty are within the EU's traditional deficit ceiling of 3.0-percent of GDP.
  
Under the so-called "golden rule," a country's structural deficit should be capped at 0.5 percent of gross domestic product.