Iceland deal on failed banks

THE UK government has welcomed a breakthrough in the £2.3 billion dispute with the Icelandic government over the collapsed IceSave bank.

Reykjavik announced a new draft deal on repaying compensation from the UK government to tens of thousands of UK savers after the 2008 collapse. It must be approved by Iceland's parliament and signed off by the UK and the Netherlands, which is also owed money.

Repayments must start by 2016, at an interest rate of 3.3 per cent, and be completed by 2046.

A Treasury spokesman said: "Mutually satisfactory closure of this issue will mark a new chapter in UK-Iceland relations."