The court ruling that proves Britain still has power inside the EU

The UK's legal victory over banking rules in the European Court of Justice shows we can do far more from inside the Union than we ever could from without

euro sign sculpture in front of the building that used to host the headquarters of the European Central Bank in Frankfurt
With the pound buying more euros than it has for around six years, should you be buying euros now? Credit: Photo: DANIEL ROLAND/AFP/Getty Images

This week the European Court of Justice slapped down a ruling by the European Central Bank on a challenge brought by the UK. While the challenge was complex, the results have implications for everyone in Britain.

The ECB had sought to prevent financial clearing houses handling euro transactions above a certain threshold from operating outside the eurozone. As foreign exchange is big business for the City, and more than half of all the derivatives traded in the UK are euro-denominated, the verdict is extremely welcome news.

In the run-up to it there was rampant scaremongering from the usual Europhobe suspects. Doomsters-in-chief Business for Britain called the ECB policy a “direct attack on London’s position as the capital of the global financial world”. A victory for the ECB would go well beyond the financial services sector, they warned, and “have a big impact on the position of non-eurozone member states as a whole and the fundamental principles of the Single Market.”

So what does this week's UK victory tell us instead? The eurosceptics have gone eerily quiet on that.

The verdict confirms that the UK can and will stand up for itself and on behalf of other EU members outside the eurozone. There is no inevitable trend towards a two-track Europe with Britain relegated to the outer ring.

The very founding principles of the Single Market - freedom of movement for capital, freedom of establishment anywhere within the EU territory, and so on – were powerfully reaffirmed. The verdict confirmed that they must remain the basis of any policy agreed separately by the ECB or the Eurozone.

Moreover, the Court told the ECB that to get the kind of powers it spelled out in its policy EU legislation must be adopted – that means 28 member states getting a say and negotiating around a table.

So the verdict destroys the eurosceptics’ defeatist narrative that we are isolated and powerless in a Eurozone-dominated Europe and that we are somehow better off out.

There is no way, indeed no mechanism, through which the UK could have challenged the ECB policy from outside the EU, even though it would still have been at the receiving end.

But there is a deeper lesson hidden in the small legal print of this verdict. Our membership of the EU is in itself a process of constant evolution and renegotiation. The choice is not and will never be between staying in a magically perfect EU, which will always put our interests first, or leaving and never having to worry about the EU again. The choice will always be between having an influence in pushing an imperfect EU closer to where we want it to be or surly estrangement and passive acceptance of EU rules we have not set.

An honest debate of the pros and cons of staying or leaving the EU should start from a dispassionate spelling out of that basic choice.