A Brexit paradise: How Iceland's 'Project Fear' backfired

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Britain warned it wields no power in German-dominated EU  

A Brexit paradise: How Iceland's 'Project Fear' backfired 

 Iceland’s Prime Minister Sigmundur Gunnlaugsson  a leader of non-EU member state, warns that Britain has little or no say over decisions made in a European Union increasingly dominated by German interests alone. He stated that the other 27 member states are summoned merely to approve the decisions of the Franco German but increasingly the latter both day or night.

 Iceland has access to the EU's single market and is free to conduct bilateral trade deals anywhere in the world. Mr Gunnlaugsson’s remarks also pour scorn on the idea the UK, the continent’s 2nd largest economy, can push through any market-oriented reforms if voters decide to stay in the EU after a summer referendum.

Wolfgang Schaeuble, Germany’s finance minister has already warned Brussels would not adopt deregulation, as suggested by David Cameron, particularly in services, which would harm its economic interests.

Having suffered the worst financial crash of any major country in the world in 2008 - the Icelandic economy is now booming with growth set to hit 3.2pc of GDP this year. Eight years on and one $4.6bn bail-out later,  has cast off the demons of its banking meltdown.

Relative to the size of its banking sector, the country’s 2008 financial collapse was the worst any economy has suffered in modern history. Its trio of "New Viking’ banks, who accounted for 90pc of its entire financial sector, crumbled in the space of days.

Where Britons are warned of the potentially cataclysmic implications of a UK exit from the European Union, Icelanders were sold a tale of perma-doom that would plague the island until it became a member of the bloc.

Lumbered with a currency that lost 60pc of its value, draconian capital controls and mass austerity, the rationale for membership was simple: as part of the EU’s supranational institutions and monetary union, Iceland would finally have shelter from the market speculators that bought the country to its knees. 

2009 also marked the euro’s first decade in existence. With financial calamity having descended on British and American shores, Brussels pronounced monetary union an unmitigated success.

In commemoration of its 10th anniversary, the European Commission released a 53-page report excoriating an entire body of mainly US economic literature which had prematurely “doomed the single currency to collapse”.

“The euro is one of the most exciting experiments in monetary history,” declared the authors.

It was in the wake of this turmoil that Iceland formally launched its bid to become a full member state of the European Union in July 2009. “Without membership we were doomed," says Gunnlaugsson, who became Iceland’s youngest prime minister aged just 38 in 2013.

The economy was left saddled with debt of 850pc of GDP, or £224,000 owed by every Icelandic man, woman and child.