Why Britain, like Iceland, will thrive outside the EU

I have no doubt that Britain will thrive after leaving the EU, whether or not it leaves with a deal. I say this as a former prime minister of a country, Iceland, which left the EU before it had even joined — and which went on to prosper in a way which would have been impossible had its application for membership been carried through to conclusion. I think Britain can learn from Iceland’s experience and find a way to avoid any major disruption when 31 October comes round.

In late 2008 Iceland suffered especially harshly from the international financial crisis. The country’s banking system experienced a near-total collapse. The value of the currency tumbled, inflation surged, government debt as a percentage of GDP more than tripled in an instant. In 2009, a new government formed by the two parties on the left submitted an application for EU membership. The rationalisation offered to the public was that joining the EU was the only way to survive.

Iceland was already a member of the European Economic Area (EEA), which facilitates free trade with the EU. But after the application was submitted, the EU became increasingly stringent regarding the implementation of EU regulations in Iceland. Many of Iceland’s bureaucrats were enthusiastic about obliging.

The elections of 2013, however, brought a halt to accession talks, and in 2015, my government formally withdrew Iceland’s application for EU membership. I had come to the conclusion that withdrawing the application was essential in order for us to be able to make the arrangements necessary for successfully rebuilding the economy.

And bounce back we did. Soon Iceland had the highest GDP growth rate of any developed country. We saw the sharpest fall in government debt achieved by any nation in modern history. Unemployment shrank and, at the same time, we invested heavily in healthcare and other essential services.