Economic war between UK and Iceland

Image via WikipediaFollowing the collapse of Iceland's banking sector, the impact on the UK will have come as a considerable surprise to many. Yet the Icelandic banks have been aggressive players in the market for deposit and loans, as evidenced by the large number of depositors and borrowers affected.

The £1bn of deposits placed with Icelandic banks by Local Authorities, now at risk, will widen the pain across the UK via its' impact on local services. Similarly, many Charities will find themselves constrained because of their exposures.

Gordon Brown insists that Iceland has acted illegally with regard to failing to honour its deposit protection scheme and consequently has initiated measures to seize Icelandic assets.

This marks a dramatic escalation in events which will leave a deep scar on international relations. Notably, the UK actions will give a number of international companies operating in the UK cause for thought about emerging political risks, which they have probably never had to do before.

Related articles by Zemanta

• Gordon Brown considers legal action against Iceland
• Iceland financial crisis escalates, trading suspended
• Struggling Iceland takes control of third bank
• Brown Blasts Iceland Over Banks
• Iceland's financial debacle escalates
• Struggling Iceland takes control of third bank
• Iceland's Landsbanki is nationalised as crisis deepens
• Financial crisis Gordon Brown to sue Iceland over near £1bn of frozen bank deposits