The Government is set to resort to legal action to recoup billions of pounds paid out to cover the deposits of British savers in collapsed Icelandic banks, the Chief Secretary to the Treasury has signalled.
A negotiated settlement to reimburse the UK was rejected for a second time by Icelanders in a weekend referendum, a result Danny Alexander described as “disappointing”.
But he stressed that the British Government had an obligation to continue to pursue the money.
About £3.5bn is due to Britain and the Netherlands, whose government also bailed out its citizens' depositors after the 2008 bank crash.
“It's obviously disappointing. It seems the people of Iceland have rejected what was a negotiated settlement,” Mr Alexander told BBC1's Andrew Marr Show.
“It looks like this process will now end up in the courts,” he said.
“There is a legal process going on and we will carry on to try and make sure we do get back the money that the British Government paid out in past years.”
The Treasury Chief Secretary said Britain would be looking to join a legal process before a European Economic Area (EEA) court.
It is the second time Icelanders have rejected a repayment settlement, having overwhelmingly rejected a previous deal last year.
The Icelandic government had hoped a new agreement on better terms would win approval.