ICELAND is warning Ireland and Greece not to copy its recovery model, even though the Atlantic island managed a return to international debt markets less than three years after letting its banks default on $85 billion (€58bn).

Iceland’s MPs have approved the repayment of £2.3bn (€2.7bn) to Britain, potentially ending a long-running saga that caused political as well as financial friction.

Iceland’s new government said it will ask parliament to vote on whether the recession-hit country should start membership talks with the European Union.

Iceland became the first government to fall from the global economic crisis today when under-siege prime minister Geir Haarde declared a general election.