[Skip to Content]

Register to receive the OMFIF Daily Update and trial the OMFIF membership dashboard for a month.

* Required Fields

Member Area Login

Forgotten Password?

Forgotten password

Court ruling proves Britain has power in EU

Court ruling proves Britain has power in EU

Legal victory over banking rules 

by Peter Wilding

Thu 5 Mar 2015

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 euro area. 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-euro area 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 euro area. 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 euro area.

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 euro area-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 on the pros and cons of staying in or leaving the EU should start from a dispassionate spelling out of that basic choice.

Peter Wilding is Director of British Influence.

First published by The Telegraph.

Tell a friend View this page in PDF format