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UK councils will continue to be reimbursed cash invested in the collapsed Icelandic banks, despite a row among the country's law-makers. Legislation to ratify a deal between Iceland, the Netherlands and the British Government to cover the country's £3.34bn losses is currently stuck in an Icelandic parliamentary committee, where a row has broken out over the debt it will impose on taxpayers. Political opponents in the capital, Reykjavik, have been lobbying for a clause that would allow renegotiation, if the repayment levels become too high. The 123 authorities involved were left nursing losses of £919.6m when the Icelandic banks collapsed last year, but the UK Government was able to limit the damage by its controversial use of anti-terrorism legislation to freeze assets held in the UK. In the aftermath, the LGA led international negotiations, with support from Treasury officials, to get agreement with the Icelandic Government. Under a deal with administrators, the first limited tranche of repayments has been made to some councils, but fears had been raised that the row could derail the agreement. But Treasury officials have issued reassurances that the row may affect retail customers who had money invested in the Ice Save accounts, and that they expect the repayments to local authorities will continue. A Treasury spokesman said: ‘The Icelandic Parliament is discussing important issues surrounding Iceland's economic future. Naturally, it will seek clarification from the Icelandic Government so as to fully understand the implications of the loan.'

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FINANCE

Icelandic cash continues to flow despite debt row

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