Editorial: Time to make the case for Britain in Europe

Expectations of a successful outcome to European budget discussions in Brussels this week are rapidly dwindling. Repeated attempts to find a compromise on how to fund the EU from 2014 to 2020 have come to nothing; after smaller-scale talks on next year's budget collapsed, many are now predicting that the talks on trickier, longer-term financing will also break down.

A failure to agree the budget would be bad enough by itself, revealing deep fault lines in European co-operation and condemning member states to extra expense as existing arrangements roll over. For Britain, however, the implications are more egregious still, giving another prod to the Eurosceptic momentum threatening to push us out of the EU with no proper debate as to the consequences.

Ours is by no means the only dissenting voice in the budget negotiations. But David Cameron's plan for a real-terms freeze is the most hawkish proposal on the table, and one which no other country supports. Nor does he have much room to manoeuvre. The Prime Minister is boxed in by fulminating anti-Europeans on his party's right who – supported by a cynical Opposition – defeated the Government earlier this month and made clear that only a budget cut will do.

The vote was not binding, but it nonetheless leaves Mr Cameron with no political breathing space. After all, any deal agreed in Brussels will need to be ratified by Parliament and he will want to avoid another, politically costly, defeat. There is therefore a real danger that the Prime Minister will play to the domestic gallery this week and refuse Britain's agreement to whatever is proposed.

Sad to say, the matter does not end there. Budget squabbles are merely an inauspicious prelude to the next EU summit, which convenes within weeks to discuss the banking union widely agreed to be vital to the euro's survival.

The plan is already fraught with difficulties. How, for example, can the 17 euro countries press ahead with centralised supervision while protecting the single market and ensuring that Britain – home of the bloc's largest financial centre – is not left without a voice? Budgetary intransigence from Mr Cameron will hardly leave EU negotiators inclined to accommodate British priorities.

Taken together with the Government-backed "competency review" aimed at repatriating powers from Brussels, the plan to opt out of a raft of EU justice and policing measures, and the growing calls for an in-out referendum, it is difficult to avoid the conclusion that Britain has one foot out of the door. Most alarming of all, some surveys suggest that more than half of Britons would actively support departure.

With the drumbeat of anti-Europeanism growing steadily louder, the onus is more than ever on pro-Europeans to spell out both the benefits of membership and the full implications of withdrawal. The Deputy Prime Minister has made a commendable effort. If only the same could be said of the Labour leader. Ed Miliband does now appear to have seen sense, warning this weekend of Britain "sleepwalking towards the exit". But he must match his words with action. It is not enough to talk sagely of reform rather than withdrawal if his party votes with rampant Eurosceptics to score cheap political points.

Responsibility does not fall on politicians alone, though. So far, the business community has been notably silent on Europe. Yet business has both the clearest view of what is at stake and the Tory ear. With the Prime Minister at the Confederation of British Industry today, it can only be hoped the opportunity will be grasped. If the case for Europe is not made forcibly, and soon, it will be too late.