Iceland will not repay the UK for years

Steve Dinneen
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Alistair Darling yesterday admitted it will be “many, many years” before the UK sees any of the £2.8bn it is owed by Iceland.

The beleaguered country’s plans to begin repayments were humiliatingly vetoed in a public referendum. With the votes partially counted, an astonishing 93 per cent voted against paying the money back, with only two per cent voting “yes”. The remainder of the votes were invalid.

The shattered nation, which lost 85 per cent of its banking sector in the financial meltdown, now wants to strike a fresh agreement before the UK election.

Finance Minister Steingrimur Sigfusson said: “We want to be perfectly clear that a ‘no’ vote does not mean we are refusing to pay. We will honour our obligations. To maintain anything else is highly dangerous for the economy of this country.

“It is not a matter of days or a few weeks but it’s important that we do this as swiftly as possible.”
Alistair Darling said he will continue to work with Iceland in striking a new deal to claw back the money but admitted it will not happen in the near future. He said: “I don’t think there’s any question... the principle for us is that we get our money back.

But behind the scenes Treasury sources were critical. One said the government was “disappointed” Iceland had rejected what was considered a fair offer. Iceland’s application to join has been put on ice while the matter is resolved.

More than 300,000 British and Dutch customers of Iceland’s Icesave scheme, an internet branch of the Icelandic Landsbanki, would have lost their savings in the absence of intervention. The debt represents more than 40 per cent of Iceland’s gross domestic product.