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Last Updated: Thursday, 23 November 2006, 12:23 GMT
The Vikings are coming
Viking costume
Icelanders are proud of their heritage

By Denise Winterman
BBC News Magazine

Icelandic companies are buying a stake in most parts of British life, football being the latest. But how is the country with a population the same of Doncaster staging a Viking invasion?

Woolworths, House of Fraser, Hamleys, Karen Millen, Oasis, French Connection, Whittards and, of course, Iceland. Much of the British high street now has a little bit of fire and ice in it - in the form of Icelandic investment.

For a country with a population of just over 290,000 - roughly the same as Doncaster - Icelandic businesses are starting to become an increasingly important deal maker in the City.

Icelandic singer Bjork
Icelanders are often 'eccentric'
In the last few years they have frequently emerged as the backers for many takeovers in the retail sector, with companies and banks such as Baugur, Kaupthing and The FL Group buying stakes in many high street shops. But the Viking invasion does not stop there.

This week a consortium financed by Icelandic billionaire Bjorgolfur Gudmundsson bought West Ham football club for a cool £85m. Last month the country's oldest bank, Landsbanki, launched an internet account for British savers.

One of the biggest children's television shows to emerge in the UK this year, Lazytown, is a Icelandic import. There was also the hugely successful installation by artist Olafur Eliasson at the Tate Modern. The Weather Project drew massive crowds in 2003. Last year's Miss World even came from the country.


On paper Iceland doesn't look like a big player. Sitting on the edge of the Arctic Circle, it is the most sparsely populated country in Europe, with an average about three inhabitants per square km. The UK has 383.

Almost four-fifths of the country are uninhabited and mostly uninhabitable. Of the 290,000 people who live there, around 180,000 live in and around the capital, Reykjavik.

Mount Hekla
Famous for its volcanoes
Before now, probably the biggest thing to come out of Iceland for the average Brit was Magnus Magnusson, followed by Bjork. It also hit the healines when it announced it was returning to commercial whaling this year after a 20-year halt, causing international condemnation. Yet the "land of fire and ice" is making a surprising impact in other areas.

The invasion by Icelandic businesses and entrepreneurs is the result of recent financial reforms.

In the late 1980s, it was a highly-regulated country and its prosperity depended on the fishing industry. Reforms in the 1990s resulted in the deregulation of the economy and banks, opening up the financial markets and allowing the sector to expand rapidly. Its economy is now dominated by services.

"In the mid-90s Iceland still had a relatively raw economy," says Neil Prothero, economist with the Economist Intelligence Unit. "The reforms allowed the financial sector to expand rapidly, this has encouraged a strong entrepreneurial spirit in the country."


But some financial experts have warned against over-playing the country's influence. One of the main reasons why Iceland is such a big investor is its tax regime.

Foreign companies borrow in countries with low interest rates, such as Japan, and park the money in Iceland where interest rates are high. This is known as carry trade. This has boosted the liquidity of Icelandic investors.

There were also fears earlier this year that the economy was overheating and credit rating agencies downgraded the country's outlook from stable to negative.

But despite all of this, other experts say Iceland is still punching above its weight and argue the fundamentals of the economy are sound.

Eggert Magnusson
Magnusson is based in Reykjavik

"The power of Icelandic businesses has been overemphasised somewhat, but they do have influence considering they come from such a small island," says Mr Prothero.

It is part of a strong Icelandic national identity to feel you are a match for the rest of the world, despite the size of the nation.

"There is a sense of empowerment in Iceland," says Sigrun Birgisdottir from the Icelandic Society.

"Because the population is so small you feel you can be seen and heard, that you can make a difference. You take that attitude with you wherever you live in the world."

Because it is remote from the rest of Europe, Icelanders are encouraged to look outside their own country.

Exotic novelty

"Because you feel you are far away you make an extra effort to take part in the rest of the world, but you maintain a strong sense of home," says Ms Birgisdottir. "There is always an umbilical cord to Iceland. We are proud of who we are."

This has always been the case, says Daisy Neijmann, lecturer in Modern Icelandic Language and Literature at University College London.

"Because it is an island nation on the periphery, Icelanders look at themselves differently. They are viewed as a bit eccentric by other nations and they are proud of that.

Population: 294,000 (UN, 2005)
Capital: Reykjavik
Major language: Icelandic
Major religion: Christianity
Life expectancy: 79 years (men), 82 years (women) (UN)

"It is a small society, which can be limiting, but it has always been outward looking. It is a mark of pride for Icelanders that they go out and achieve things, but they maintain strong bonds with home."

Iceland's interest in the UK is driven a lot by language. English is widely spoken and the country imports many English-speaking television programmes. In business, the fact the UK is open to outside investment has driven big Icelandic businesses to do deals over here.

What also helps - both socially and in business - is the view that Icelanders are a bit different. People are not afraid of them, they are usually bemused by them, says Ms Neijmann.

"They are perceived as non-threatening which helps them be accepted. There is a strong nationalist movement in Iceland but it not denounced like other movements in other countries."

But times could be changing. Reception to news that West Ham had been bought by Gudmundsson's consortium was decidedly cool.

"For a long time we have been an exotic novelty, but I sense attitudes are changing," says Ms Birgisdottir. "The West Ham deal definitely got a cooler reception. Maybe attitudes towards us are changing."

Your comments

My guess is that being primarily a hunting nation we have always had to make snap decisions, hence it comes naturally when snapping up badly run companies in the U.K. where as the british would need many committee meetings to make the same decision. In order to stay ahead of the other guy you must be better and quicker. Same as with sports.
Sverrir Johannesson, Egilsstadir Icelnad

I travelled to Iceland for the first time last year and have never felt such a sense of space and met such a friendly race of people. Its encouraging to see that despite the size of their country they're able to make a big difference to the rest of the World.
Andrea, Flitwick, Beds

It is good other nationalities keep investing in the UK. That tells us we are very attractive for investment. They cannot take say West Ham away somewhere it would not work for the investment, nor for many other similar investments made.. So no "small minds" please just cheer after all it is always someone else's money that is having the "Punt" :-)
Bill Murray, Brechin

People power should now rule here with us no longer shopping at companies with an Icelandic connection until Iceland stops hunting whales.
Pat Buckle, Maidstone, UK

How refreshing to have such an interesting article which does not contain moans and groans or threats. Good luck to Icelandic investors. I am sure we can learn and benefit from their attitude and views. I was amazed how small their population is. I hope they do not discover oil in their uninhabited land as this would ruin things for them.
P Thomas, Bournemouth

I have always been a proud Icelander living in Britain and the fact we´re seen as a small nation punching well above our weight doesn´s surprise me. When I saw the news of an Icelandic businessman buying an english football club (the English football league is the second biggest religion in iceland, by the way), i was not surprised, there isn´t much to buy in Iceland that would boost your bank account much, we´re such a small population that if i owned a business and some guy was offering to buy it off me, it´d probably be my neighbour or my auntie. We have always been known as the ´Crazy Icelanders´, its what i was called at school. It just asks the question 'whatever are we gonna do next?'
Jón Gunnar Hannesson, Swansea

My 4 year old boys thinks Lazyown is great and with the programme encouraging kids to eat fruit go to bed early and do exercize I certainly have no problem with him watching this. I was surprised when I found out it was from Iceland but when I think about it that is probably why the programme is so different from the other kids programmes around at the moment.
Katrina, Ashby De La Zouch, Leicestershire

I think its great! I went there for a geography trip a few years ago and I can honestly say it is the most interesting place on earth. Did you know they drink more coke per person than anywhere else in the world, have the highest adult literacy rate in the world, highest mobile phone usage per person and there is a special breed of horse which has a another way of running or walking on top of canter and trot etc. It is illegal to take horses into Iceland, so as not to risk diluting the gene pool and getting rid of this weird and wonderful horse. Go Iceland!
Lawrie, London

Icelanders and the Irish are very similar in their national identity is an energy source. Icelanders have a very cool, confident, hard working but caring society. Incredibly democratic and non-hierarchical. We could learn a heck of a lot from them.
Noel , London

Does anyone know if there's a comprehensive list of such companies so I can avoid giving them any of my money until Iceland ceases whaling?
Chris, Sheffield

surprised you didn't mention Sigur Ros the icelandic group who amongst other recordings have provided the track Hoppipolla for BBC's Planet Earth
Tony Collier, Stafford

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