Sunday, July 26, 2009
UK was clever to let the pound devalue early in the cycle; Europe will be less lucky
Iceland is over the worst. The country has defied the global shipping crash to eke out an 11pc rise in exports over the last year. Iceland will be back in surplus by next year, from a peak deficit of 25pc of GDP. Icelanders have taken a hit, of course. Unions have accepted 'real' wage cuts of 10pc. Health care and welfare is being cut 5pc, education 7pc, and the rest 10pc. However the jobless rate has risen to just 9.1pc. This is below the eurozone average of 9.5pc, and is stabilising much earlier. Nothing is cheap, but prices have come within reach. Reykjavik's cafÃ©s are packed with euro-youth, at last able to afford a taste of all-night dancing at this Arctic Ibiza. Out in Iceland's Eastern fjords, Alcoa has raised aluminium production to record levels.