Iceland's leader said the country would "honour its obligations" over the £2.3bn (€2.55bn) owed to Britain for lost savings.

Iceland’s president today refused to sign into a law a bill to compensate Britain and The Netherlands for losses from the collapse of an internet savings bank.

Iceland's president has said he is not ready to sign legislation that would allow the UK and Holland to be repaid the €3.3bn lost when the island's banks collapsed.