Icelandic parliament votes to return £3bn to UK

The Icelandic parliament has voted in favour of a plan to repay £3 billion to the UK and the Netherlands.

The £3 billion payment will compensate the UK and the Netherlands for the cost of bailing out consumers with cash in Icesave, part of failed Icelandic bank Landsbanki. A deal to repay the money was agreed in June but the details of the repayment have only now been settled. 

The repayment plan is controversial as Iceland has agreed to pay 4% of its GDP each year to the UK, and 2% to the Netherlands, which could stretch its fragile economy. The terms of the plan mean repayments start in 2016 and any remaining debt will be written off in 2024. 

The governments of the UK and the Netherlands still have to approve the plan, which is meant to make it easier for Iceland to get financial support. The Icelandic government was forced to nationalise its three largest banks Glitnir, Landsbanki and Kaupthing in late September and October 2008