9 October 2017
Originally published by Brexit Central.
If someone had asked me a month ago what they meant by ‘lessons we could learn from our friends across the water’, I would instinctively have thought they were talking about the U.S. That was before I went to Iceland.
There is a lot to see in Iceland. If you like stunning scenery, glaciers, which cover approximately 11% of the island’s total area and in some places are covered in icecaps up to 1km thick, waterfalls over 100m high, live volcanoes and incredible, natural phenomena like the Northern Lights and geysers, which can spurt jets of boiling hot water up to 40 m high, the chances are you will like Iceland. But as I recently found on my first visit – as part of an Inter-Parliamentary Union delegation – to this island in the middle of the north Atlantic, there is an awful lot more besides to like, admire and, crucially, learn from our Icelandic friends about making a success of Brexit.
Iceland’s recent and remarkable success story offers a truly inspiring lesson in the importance of not just geothermal, but also the energy that flows from self-belief. For this little island of only 330,000 inhabitants is securing economic success totally in disproportion to either the size of its population or the logical disadvantage of its remoteness. Fishing continues, of course, to be a mainstay of the economy. However, success has also gone hand in hand with innovation and diversification. Take tourism for example. This year, Iceland will welcome about 350,000 tourists from the UK alone, compared with 422,280 visitors in total in 2006; 10 years later, that figure stood at 1,792,201. According to the latest projections, it is likely to top two million in 2018 with direct flights from lucrative Asian markets for the first time. As the former President explained, the resulting prosperity is a far cry from the poverty of only a century ago. In fact, the outlook could not be more different from when Iceland gained its sovereignty in 1918 or, indeed, from the immediate aftermath of its traumatic financial crash less than 10 years ago.
In 2008 few would have predicted that Iceland would more than bounce back, and yet it has. In meetings with the new President, the Speaker of the Parliament, Government Ministers, the Deputy Governor of the Central Bank and key business leaders we heard the same message again and again: they are optimistic. And they have good reason to be. Last year Iceland’s economy grew by 7.2%; unemployment is down to 3%; interest rates have been reduced from their 18% height to 5%; and in March, capital controls were lifted, making foreign direct investment even easier and more attractive.
All of this despite the fact that, or perhaps because, they are not in the EU. Not for them the possibility of bailing out the banks. With debts of $86bn in an economy in 2009 of $13bn, that option did not exist. Yes, the pain barrier they had to break through was significant, including taking out a loan from the IMF which they are steadily paying back, but they came through to the other side to build an economy which is now one of the highest performing in the world. By 2015, their debt to GDP ratio had fallen to 68%, 20% lower than ours – the sixth-largest government debt of advanced economies – is expected to be this year, according to the OBR. And, as the Deputy Governor of their Central Bank emphasised, they are paying down their debts on the back of a record surplus in their current account last year.
So what lessons did I take away from my time in Iceland? First, I saw tangible evidence that success is possible outside the EU, that a country can recover and prosper to an extent that one locked into either the EU or, as Greece or Italy – whose output is still significantly below 2007 levels – know to their immense and enduring cost, imprisoned within the Euro, simply cannot. Second, I felt their friendship with the UK; they believe in us, perhaps, embarrassingly, more than we believe in ourselves. As the Foreign Minister told us, strategically, Iceland and the UK are in the same boat with the same interests: a global Britain is the best possible news for Iceland and for free trade. To put it another way, they have gone global and reaped the benefits. We need to do the same.
The question is: will we? Will we insist on going global from March 2019 and thereby bring the benefits of Brexit home through free trade deals as soon as possible? Or will we allow Juncker and his anti-democratic co-conspirators to lead us merrily towards their carefully constructed cliff-edge and, through a war of attrition and deliberately interminable negotiation, effectively reverse the referendum result? For that is surely the Eurocrats’ plan.
Iceland’s inspiring example should put fire in our belly. Their spirit of optimism is infectious. They have a saying in Iceland, “Petta reddast”, because they genuinely believe that “it will all work out”. Self-belief and a can-do culture has served them well. As someone with a severe disability, I relate to that. Some might call it bloody-minded; I prefer to think it is actually about being British. Doctors, like too many of our politicians, often see only cliff-edges to be avoided rather than summits to be conquered. ‘Be realistic’ they say, as they urge me to lower my expectations. But they fail to understand that success depends on having the self-confidence to reject the reality that others would accept, to defy defeatism and define your own destiny. That is what, to its immense credit and the huge benefit of its people, Iceland has done. We would do well to learn these lessons from our friends across the water.
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