The Bank of England is loaning £100m to the UK arm of Landsbanki so that it can repay its UK customers.

Landisbanki was nationalised by the Icelandic government last week and its UK arm closed down leaving customers here unable to access their money.

The Icelandic foreign minister has responded to the economic problems there – national debt at 500% of GDP and their top 3 banks nationalised – by saying that their long term goal is now to join the EU and the Euro and get bailed out by the European Central Bank.  No, that’s not a joke.  He said:

In the short term, out defence is co-operation with the International Monetary Fund and in the long term EU membership, adoption of the euro and backup from the European Central Bank.

So what he is, in fact, saying is that the English taxpayer will be bailing out one of their now state-owned banks and then bailing out the entire country if it joins the EU and becomes a net recipient of EU funding.  Not what I would call a good deal for the English taxpayer and if they do go down the route of joining the EU, not a good deal for Icelanders.  Their economy is up shit creek now but if they join the EU their paddles will be confiscated and given to a French farmer to use as kindling to set fire to his fields.  The Icelandic economy was, until recently, reliant on fishing, banking and services.  Banking is a no-brainer from now on, services are looking a bit dubious but fishing will at least let them feed themselves.  But not with an EU fishing quota though – they’ll end up throwing more back in the sea than they take home and that’s assuming the Spanish don’t get the quotas first like they did in our waters.

I wonder if the Icelanders have an equivalent phrase for “out of the frying pan and into the fire”.

Technorati Tags: Iceland, Landsbanki, IMF, Federal Europe