Twenty-five of 27 European Union countries have signed a treaty committing their governments to fiscal austerity. Only the British and Czech delegates disagreed with the terms and abstained from signing.
The treaty prohibits deficits of more than 0.5 per cent of annual output, except in “extreme circumstances,” according to The Globe and Mail.
According to the BBC, under the pact, “Eurozone countries will scrutinise each other’s budgets and the European Court of Justice will be able to check whether nations stick to the rules. It will fine them up to 0.1% of national GDP if they fail to do so.”
But the treaty is only on paper for now. To take effect, the so-called “fiscal compact” must be ratified by internal votes in at least 12 eurozone states, which might prove challenging as Europeans have grown skeptic of the EU as a whole and the euro in particular.