Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson has said that the UK has not learnt from the global financial crisis and is now faced with the same problems that led to Iceland’s banks collapsing. Lenders in the UK and Europe are still advised to lend to borrowers that want to put funds into bubble-prone assets such as housing and stocks instead of more productive long-term initiatives.
Iceland experienced a deep recession from 2009 to 2010, but was able to achieve a more rapid recovery, with the economy growing by 2.7 per cent in 2011.
Sigmundur Davíð said he finds the advice Europe and the UK is receiving worrying, and that he wants them to understand that a large number of European banks continue to function on regulations that resulted in the crash in Iceland. He said Europe’s financial system still poses a threat to the larger economy because of legislation that encourages asset bubbles.
The prime minister explained that Iceland was forced to learn from its errors and change the focus of its banks towards more traditional investments and savings, which he hopes will result in the crisis not being repeated.
However, he fears the same is not happening in the UK and Europe, and advised them to reassess how the financial system functions. He explained that Iceland had to consider why things went wrong, assess what could be done differently and look at ways to prevent the collapse happening again.